Author: Andre Coleman

This assignment is generally based on Olympics 2010. On 6th July 2005, the International Olympic Committee (IOC) announced that London would congregation the (The London 2012 Olympics, Bob DigbyCommunity Geographer, and Geographical Association)

2012 Olympics It was chosen to be held in London Stratford, Newham. This is a sports competition which all the people in the world celebrating. To become an Olympic champion the athletes in all around the world together in one city challenging each one in range of games. Games are likely to be held on end of July 2012.

TASK1

Introduction

In this task I do investigate planning principles and marketing planning process of 2012 Olympics. Develop the strategic marketing plan.

The marketing planning principles and process

The most basic marketing principles (According to kotler (1980) are applied to customer point of reference to recognize what goals gathering now, believe, and do. The course of act begins with marketing research to identify market segment and potential needs, desires, attempt, concerns, performance. Then settle on the target market be able to influence and satisfied. Then use” 4ps” to power on to the market. The”4ps” are product, price, place and promotion. As well as the marketing mix. The marketing principles also revolve around the customer. The principle is “getting the customer the right services and goods in the right time. The principles also place emphasis on customer involvement and well as integration or involvement of staff in all marketing decision making. To get this right, the process has to be taken into consideration.

The marketing planning process (marketing principles and practice)

Where are we now?

Where do want to be?

How do we get there?

Which way is the best?

How do we ensure safety arrival?

Where are we now?

To complete the marketing research and collecting the past data about the project is the first step. And also have to analyse this information and present that to future plan.

This process helps to

consider the financial and trade environment

Consider present status in the marketplace and main sides of sales.

Come across at the strengths and weakness of the company.

To analyse the existing circumstances have to carry out situational analysis.

SWOT analysis of 2012 Olympics.

SWOTS stand for- strengths and weakness as related to opportunities and threats.

STRENGTHS-

Quality and a well highly regarded construction of conducting the project.

Sir Robert Mc Alpine is one of the construction firms on the london2012 project. Because this company is an icon in the in a building construction sector in UK

The West Midlands is geographically and economically well-placed for the London 2012 Olympic Games.

Weakness

Marketing techniques not superior. Need to improve new marketing techniques to customers before, during and after the Olympic.

Staffing and management problems

Opportunities

Encouraging young people to sports.

The peace can be developed.

Enhance the tourism of UK.

Threats

Security of people- Dr peter Rayon the adviser of London Olympic 2012 added special team for supervise bomb management and VIP, Athletics security.

Current financial circumstances

Where do we want to be?

After identifying strengths, weakness, opportunities and threats of London 2012 project and made assumptions about outside factors that may affect to the project have to set up the marketing objectives.

The objectives are what we want to achieve to complete the task. This is the first action of entire process of preparing a marketing plan.

Objectives of London 2012

Care for lands cape without any changes

To make sure to give safe games for london2012 the Olympic organisation committee work in partnership with police, government, public authorities and security companies.

Ensure best personal safeness before and during Olympic competition.

The goals of london2012

The business and employment development

In the education sector skills and desires.

Enhanced health and better life.

Superior environment (Sources)

Better communication

The mission of london2012

Source: IOC website (2005) Mission Statement.

The Olympics should provide aˆ¦

“Sustainable environmental legacies, such as

aˆ? Rehabilitated and revitalized sites,

aˆ? increased environmental awareness,

aˆ? improved environmental policies and practices,

The vision of London 2012

The vision of london2012 is a great change in different areas by the power of games. Such as changes in people’s lives, sports. And also motivates the people to go head on their lives through the sports.

(c)How do we get there? (How to write a marketing plan by john Westwood)
Strategies

The marketing strategies are the broad methods selected to accomplish exact objectives. There are different types of strategies

Defensive strategy

Developing strategy

Attacking strategy

First look at the type of strategies that available is to use a matrix that was developed by Ansoff.

Market penetration-

Worldwide market penetration-The International Olympic Committee was leap to propose the games event to China.

Global sponsors -Consumer products giant Procter & Gamble has signed up as a global Olympics sponsor.

Product development
Olympic park master plan (designbuit-network.com)-

In 2006 January (ODA) was workout the master pan of Olympics.

Olympic Games will provide local tourism business for both to new visitors from overseas and regional travellers.

Market development ((gamesmonitor.org)

New report predicts that the value of the UK CCTV market will increase by 10 per cent by 2012.

Investment opportunities – to fabricate Olympic named products and services. E.g. Olympic t-shirts , mugs, cups, hats, toys

Diversification

London 2012 Business Network

The Network component

1) Vital information for West Midlands business

2) attractive business events

The expansion of new clean tech industries and other strengths in artistic industries, media, logistics, and tourism.

(d)Which is the possible meaning?

Tactics

Tactics are built-in the particulars of entity path of achievement that will be followed on a daily basis.

Once developed the marketing strategy, there is a “Seven P

Formula” should apply to constantly assess and revaluate Business activities.

The seven P’s

Product

Price

Promotion

place

process

physical evidence

People

Product

Compare to the other competitors offer be superiority deal.

E.g.-

New website presents including verity of facilities and opportunities

Development of Olympic park

Price

The ticket prices have been announced. Tickets are available from ?20. Also special prices offered to young people, seniors across all Olympic sports. In this case from the cheapest price to higher price tickets are available according to customers’ needs.

Promotion

To promote London 2012 and attract the people on that specially designed ticket draw was introduced.

Place

Local people and visitors are making improvement works that have taken place along The Greenway, for the Olympic Park to Victoria Park and West Ham Station. East London is being developed with all the facilities and attractiveness.

People

To this huge project education sectors, business sectors, cultural organisations, charity, volunteers are involving to this. And all the range of customers is target in all around the world.

(e)How do we ensure safety arrival?

Control measures

The ODA has resolute to clear its progress manage utility via a Planning

Committee.

This manuscript provides direction for the authority of the ODA’s

Services biased the Planning Committee, particularly to release

Of the expansion manage.

Creation decisions on preparation application

Prepare and submitting planning reports to the Planning Committee

Offer planning advice to the team.

The strategic plan

Overall strategic concept

Guidelines

Strategic objectives

Strategic principles

Strategic phase

Develop of Olympic facilities

Principles and locations

Plan and design Olympic green

Total reflection for Olympic games

Environment development

Pollution control

Environment development

Transport development

Information and technology development

Social environment development

Cultural environment

Health care and security

Legal environment

Strategic support

Speedup economic development

Advance development new technology

Develop human recourse management

Olympic action plan

Action plan proposal

Strategic conception

Work task

Support measures

Transport construction

Guide lines/ objectives

Transport (urban)

Traffic management

Traffic support system

Traffic organisation

Energy development

Proposals

Mix and readjustment

Clean energy projects

Environment protection

present states

guidelines/ objectives

prevent/ control pollution

mange assure measure

task1 (b)

Here I am going to discuss the SWOT management tools that could help to analysis the current 2012 environment with reference to marketing.

The SWOT management tools

SWOT analysis is for Strengths, Weaknesses, Opportunities, and Threats.

A SWOT analysis is a planning tool used to understand the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business. It involves stating the objective of the business or project and identifying the internal and external factors that are either supportive or unfavorable to achieving that objective. SWOT is often used as part of a strategic or business planning process, but can be useful in understanding an organization or situation and decision-making for all sorts of situations.

Internal factors – The strengths and weaknesses

To identify the strengths and weakness have to audit 7ps, 7s, ans5m

External factors – The opportunities and threats

To identify the external factors have to cover PEST analysis.

A SWOT analysis can be used a method of sales distribution

a business idea

a strategic option, such as entering a new market or

launching a new product

SWOT ANALYSIS

INTERNAL

EXTERNAL

STRENGTHS- recourses and capabilities can be used for competitive advantage

e.g.-strong brand names

WEAKNESS- absence of certain strengths

E.g.-weak brand name

OPPURTUNITIES- external environment analysis can reveal opportunities for growth. E.g. unfulfilled customer needs

THRETS-changes in external environment

e.g. new regulations

Can be identified strengths and weakness in the current environment when we do the SWOT analysis. So after that whatever the weakness we can convert for strengths. And also we can match opportunities and strengths and supply best service for London 2012

PEST ANALYSIS
What is PEST Analysis?

Organization considers PEST before and beginning the marketing process. After that environmental analysis should be continuous and feed all aspects of planning.

The entire Marketing environment is made of

1. Internal environment e.g. staff

2. micro-environment e.g. our external customers

3. macro-environment e.g., Economic forces

Political factors.

Stability

government’s policy on the economy

government view on culture and religion

Terrorism influence in traffic Activities and it will boost need for crisis and business stability.

Economic Factors.

Consider the state of a trading economy.

1. Interest rates.

2. The level of inflation Employment level per capita.

e.g

Global contest may persist to boost over the next 5 years.

London 2012 Olympics driving venture.

Drive to reduce costs.

Social cultural Factors

In this case have to consider

the roles of men and women in society

the population

customer constitutional rights and responsibilities

Technological Factors.

It is a competitive advantage, and huge driver of globalization.

Cheap and supper standard of quality

Distribution change of technological development. e.g. books via the Internet

Technical improvements to trim down exhaust waste.

Potter’s five

A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. Porter (1980a) defined the forces which drive competition, contending that the competitive environment is created by the interaction of five different forces acting on a business.

competition amid suppliers
Threat of new market entrant
Bargaining power of buyers
Power of suppliers
Threat of substitute products
Task 2
Introduction

In this task i am going to discuss the market strategy options available and benefits and limitations.

THE MARKET STRATEGY OPTIONS

A marketing strategy is the outcome of decisions being made a exacting product or service promote to its aim customers.

In this case i do present

Ansoff growth matrix- four strategies

Market penetration

Penetration pricing

insistent advertising

Traditional industries. – Memorial souvenir, sporting goods which benefit from the Olympic boom.

Market development

Targeting new customers

The new website has been developed to keep you up to date with our product development. It includes-

News
Technical
Technology
Products
Future Website Development:

On-Line facilities

Product development

Product line stretch

Introducing new line

offensive new product with new sector

The Sponsorship Programme with five-year calendar of events and opportunities.

Diversification-

Advantage of diversification is even one side of business go through bad situation, the other may not be affected.

Marketing mix

Marketing mix is putting the right product in the right place, at the right price, at the right time.

American author, Philip Kotler prefers the 4 Cs.

He suggests that the 4 Ps are a seller’s mix or sales orientated approach and it therefore should be replaced by the 4 Cs which are more customer orientated, or marketing orientated.

It is made up of

Customer needs and wants (the equivalent of product),

Cost (price),

Convenience (place) and

Communication (promotion).

1960 by E J McCarthy.

The 4Ps are:

Product / Service

Place

Price

Promotion

Product/Service

Have to consider what the Customer needs from the product or service are and Features that needs.

Then look at the place. The easy places to customers can reach this product or service and access the right distribution channels?

After this, what is the price as they want and What is the value of the product or service Are there established price points for products or services in this area and What discounts should be offered to trade customers, and also compare the price with competitors.

Then think about the Promotion. In this case competitor’s promotions and how that influence to our promotional activity does all those have to consider.

When consider the Olympic 2012 in London, when we do practical the marketing strategic options the marketing mix has allots of benefits and also varies limitations.

Because of London 2012 the construction sector, business economic sectors, education sectors transport systems, like that allots of sides on UK is being developing. But because of the security reasons like terrorism and pollution, environment protection there are some limitations have to consider with all the strategic options. This project pushes the country through the development of new technology such as giant screens and environment protection like green scheme.

Task 2 (b)
The stake holder

‘Stakeholders are anybody who might directly be affected and influence on London 2012 Olympic

Main stake holders of London 2012

British association

The BOA is completely dependent and commercial sponsorship who support for GB.

DCMS

Responsible for the London Olympic Games and Paralympics Games and works closely with other key stakeholders –

THE MAIOR OF LONDON

The Mayor of London is Co-Chair of the Olympic Board, which oversees the 2012 project.

Olympic Park Legacy Company

After the London 2012 Games this company is responsible for the long-term planning, development, management and maintenance of the Olympic Park.

Secondary stake holders

Media

TFL

Schools

Police/ forces

Customers

sponsors

Stakeholders are analysis according to their power and interest of the organization.

There are four types of stakeholders

Keep Satisfied -high power /low interest

Engage Closely and Influence Actively- high power/ high interest

Monitor (minimum effort)

Low power low interest

Keep Informed-low power / high interest

It is important to involve stake holder to marketing decisions be cause some types of planning purpose will need to comprise a report of participation to show stakeholder conversation in move ahead of the submission of the planning application. And some projects, like business planning require stakeholder participation and wider communal liability. Key stakeholders are directly influence and important to the success of the project.

Task 3(a) current changes

The pest analysis of London 2012

Political-

Political factors are mostly including government legislation forcing businesses.

The Olympic Games are frequently under attack by terrorist groups.

Sports events are mostly developed and improved in education sector.

The cost of Olympics budget may affect to present government stability.

Economical-

Economic services consist of effects of increase, interest rates and exchange rates.

Present financial dip can be a pressure to the government.

Over budgeting of the project

Hard to cover the Skills gap

Social-

In the schools increasing participation in sport

Community Development such as charity organizations, volunteer work forces.

Technological-

Technology is changing speedily. Depending on market, technology can be change.

For London Olympics giant screens are best example for that people can watch the Olympic in live where ever the country when screens are available.

On line people can do investments and develop the business through the new web site.

Task 3 (b) how respond

For all these changes planning committee and project team has to respond to reach their goal.

So they….

Have to consider with health and safety rules and regulations and follow them accurately for safeness of the people.

The data’s of the project and employees and all the people who involve to the project must be protected

And the mean time have to provide best opportunity to the people.

For technological changes if there any skills gap have to make use from another countries. It may be very expensive.

Task 3 (c) the functional areas may develop

Hr

Security

media

transport

HR

In the hr sector have to clarify the present job opportunities. And to get maximum out come from human recourse. And also by minimise the number of jobs and cover the budget of the project.

School student’s projects and volunteer workers projects and also awarding systems can be introduced next 3 years.

Security

For security purpose high tech speed cameras can be fixed.

Train a special secret security team with special hidden cameras and mike that no one can recognise.

Media

Giant screen

New website

Special magazines

Transport

Development of roads, highways

Special buses, fights, trains for London 2012

Management can be generally defined as a art and science of getting the things done from others. The previous definition explains that a manager plans and guides a particular work which is done by other people. In this assignment I will be discussing about different strategic management process. Strategic management process is one of the very important management process which are been used by different organisation’s.

Strategy :- Strategy are the resources used by the managers to achieve long term objectives. In simple term, strategies are the idea’s which are been used by the management.

Strategic management :– Strategic management is a conduct of drafting, implementing and evaluating cross functional decisions in enabling to achieve its long term objectives.

There are different types of process involved in strategic management :-

Marketing is accepted globally as a life blood of any organisation. In this analysis I felt that strategic management is at the same level as marketing which decides the future and prosperity of an organisation. Practicing the management of strategies is very crucial in the competitive world. Successful managers will have to know their business market situation and position and to implement the strategies when required. I kept these objectives in mind and invented some management qualities in myself while doing a research on this topic. I feel that I need more knowledge of the management practices. So in my research on strategic management I had a good understanding of strategic management and practices.

Basically the concept of strategic management closely resembles elements of foresights; this means planning a head is a major element in the business. Strategic management is considered as a life blood of any organisation. This assignment on strategic management covers the change and development in the organisation.

I have also understood that having a clear idea of strategic management is crucial in today’s competitive business world. Company’s now a days seek ways to achieve a competitive advantage with other players in the industry that they operate. The environment in which a company operates can provide circumstances where the outcomes may be positive or negative. Many organisational studies have presented numerous theories that help companies in taking new ways in dealing with their operations.

Strategic management is one of those important management theories and process that has been employed constantly by any business to address their management and decision making needs.

I have chosen Holiday Inn as an example to illustrate the adaptation of strategic management and its process. In this assignment I have written about how holiday inn hotels analyse and critically evaluate the organisation practice to solve the problem connected with implementing their strategies.

Main body :-

Now I will be giving a short history on Holiday Inn hotel. Kemmons Wilson initially came up with the idea after a family road trip to Washington, D.C., during which he was disappointed by the quality and consistency provided by the roadside motels of that era. The name Holiday Inn was given to the original hotel by his architect Eddie Bluestein as a joke, in reference to the Bing Crosby movie.

In 1957, Wilson franchised the chain as Holiday Inn of America and it grew dramatically, following Wilson’s original tenet that the properties should be standardized, clean, predictable, family-friendly and readily accessible to road travellers. By 1958, there were 50 locations across the country, 100 by 1959, 500 by 1964, and the 1000th Holiday Inn opened in San Antonio, Texas, in 1968. The chain dominated the motel market, leveraged its innovative Holidex reservation system, put considerable financial pressure on traditional hotels and set the standard for its competitors, like Ramada Inns, Quality Inn, Howard Johnson’s, and Best Western. By June 1972, when Wilson was featured on the cover of Time magazine, there were over 1,400 Holiday Inn hotels worldwide. Innovations like the company’s Holidome indoor pools turned many hotels into roadside resorts.

The company later branched into other related enterprises, including Medi-Center nursing homes, Continental Trailways, Delta Queen and various related enterprises. Wilson also later developed the Orange Lake Resort and Country Club near Orlando and a chain called Wilson World Hotels. The family of founder Kemmons Wilson still operates hotels as part of the Kemmons Wilson Companies of Memphis. Wilson retired from Holiday Inn in 1979.

Although still a healthy company, changing business conditions and demographics saw Holiday Inn lose its market dominance in the 1980s. Holiday Inns, Inc. was renamed “Holiday Corporation” in 1985 to reflect the growth of the company’s brands, including Harrah’s Entertainment, Embassy Suites Hotels, Crowne Plaza, Homewood Suites by Hilton and Hampton Inn. In 1988, Holiday Corporation was purchased by UK-based Bass PLC (the owners of the Bass beer brand), followed by the remaining domestic Holiday Inn hotels in 1990, when founder Wilson sold his interest, after which the hotel group was known as Holiday Inn Worldwide. The remainder of Holiday Corporation (including the Embassy Suites Hotels, Homewood Suites by Hilton and Hampton Inn brands) was spun off to shareholders as Promus Companies Incorporated. In 1991, Bass launched Holiday Inn Express, a complementary brand in the limited service segment. In 1994, Bass launched Crowne Plaza, a move into the upscale hotel market. In 1997, Bass created and launched a new hotel brand, Staybridge Suites by Holiday Inn, entering the North American upscale extended stay market. In March 1998, Bass acquired the InterContinental brand, expanding into the luxury hotel market. In 2000, Bass sold its brewing assets (and the rights to the Bass name) and changed its name to Six Continents PLC. InterContinental Hotels Group (IHG) was created in 2003 after Six Continents split into two daughter companies: Mitchells & Butlers PLC to handle restaurant assets, and IHG to focus on soft drinks and hotels, including the Holiday Inn brand.

Business relationship with Gulf Oil

In 1963, Holiday Inn signed a long-term deal with Gulf Oil Corporation in which the lodging chain would accept Gulf credit cards to charge food and lodging at all of its hotels (in the United States and Canada). In return, Gulf would build service stations on the premises of many Holiday Inn properties, particularly those along or near major U.S. and Interstate highways. Many older Holiday Inns locations (including some no longer part of the chain) still have the service station properties intact today, either still in operation or closed down. With the exception of a few locations in the eastern U.S., hardly any of the still-open stations are now Gulf outlets. The portion of the agreement which permitted Gulf credit cards to be used for payment of food and lodging at Holiday Inns was copied by competing lodging chains and major oil companies during the mid-to-late 1960s. Most of those agreements fizzled out with the 1973 oil crisis. The Gulf/Holiday Inn arrangement ended around 1982.

The brand name Holiday Inn is now owned by IHG, which in turn licenses the name to franchisees and third parties who operate hotels under management agreements.

In January 2002, The Wall Street Journal reported that the company, led by Ravi Saligram, was producing a new 130-room “Next Generation” prototype hotel to rebuild the brand. It would include a bistro-like restaurant and an indoor pool. The first of these prototype hotels, the Holiday Inn Gwinnett Center, was built in Duluth, Georgia, in 2003.

On 24 October 2007, IHG announced a worldwide relaunch of the Holiday Inn brand. The relaunch is “focused on delivering consistently best in class service and physical quality levels, including a redesigned welcome experience and signature bedding and bathroom products…” The first relaunched Holiday Inn is expected to open in the USA in the spring of 2008. The whole relaunch process is planned to be complete by the end of 2010.

In September 2008, IHG announced the creation of a new timeshare brand, Holiday Inn Club Vacations, a strategic alliance with The Family of Orange Lake Resorts.

As told before strategic management is a set of activities undertaken in the order of time. One of the first tasks in strategic management is environmental analysis. Environmental analysis is the study of an organisations environment to pin point the environmental factors that can significantly influence the organisational operations. It provides a frame work for understanding an organisations environment with the aim of helping to find the key issues and different ways of coping up with the complexity and change. A business organisation operates in an external and internal environment. The factors which influencing the external environment is known as PESTEL.

PESTEL stands for political factors, economical factors, social factors, technological factors, ecological factors and legal factors.

Analysis:-

The political, economical and social context stood as a big challenge for the organisation of Holiday Inn when they entered the market. the holiday inn operations are highly influenced by the policies set by the government in which ever territory or country they operate. Most of the Holiday Inn are controlled by regulations of operations and policies of individual properties. The Holiday Inn group will also focus on concerns such as health and safety employment, laws , worker protection and environment. From my studies I think all these elements are seen in the control of government that authorises licensing of hotels in different states. Being in a business environment they have to abide by the employment procedures and tax obligations where they operate. As the company is widely expanded and well developed they must co-operate with the practices set by political body. After my research I think this company should get full co-operation from the political power to succeed in local and international market. as many private enterprise when holiday inn was opened the management had very informal sense of direction setting up a few long time goals without implementing proper strategy. How ever by implementing a new scenario in their strategy with set an international competitive advantage in hotel industry as tourist increased every where and the hotel accommodation was in demand after this the management of Holiday Inn realised the need and development of planning strategies. The management achieved a competitive advantage position and enhanced the holiday inn group’s performance in relation to its competitor. Company have taken a very good advantage of this point and served this market segment all the time. They have given market what they want according to the expectations. I think by going through company history the Holiday Inn is spread all over the world. This vast expansion is because of its good economical stability.

The company has its own concerns involving economic factors. The branches and franchise like Holiday Inn has the tendencies to experience the hard ships in instances where the economy of the respective countries is hit by inflation and changes in exchange rates. Because of the disposable income of the citizens in developed countries the holiday inn group gave prior importance in marketing their business because of the economic stability of these countries.

Holiday Inn is a world wide chain and its international functional strategies will always yield profitable returns. The potential customers are from all over the world. It is been noted that the holiday inn company has given the market such as Europe, Asia, America with regards to their social-cultural needs. Holiday Inn, like all other hotels has established a good system in determining the needs of the market. The company uses the concept of product, personality, behaviour of the customer and purchasing to its advantage.

Now I am going to talk about the technical factors influencing the company. This is because of the technical advancement due to which the company could reach in a very short span to many people about their various products and service information. Customers can contact Holiday Inn by many means such as emails, telephone, travel agents, website etc. holiday inn is providing their guests with all modern amenities and facilities to their rooms to provide the best accommodation experience. Their hotels all over are fully equipped with modern amenities and technical advancement. The above mentioned study helped me a lot to determine how much the elements of PESTEL were helpful and positive for the development of the company

After the analysis of PESTEL and depending upon that outcome I have also carried out SWOT analysis of the company Holiday Inn which gives me exact position of the company in the market.

SWOT stands for strength, weaknesses, opportunities and threats. These are the factors influencing the internal environment. SWOT analysis is extremely useful for understanding and decision making for all source of situation in business and organisation. It also provides a frame work for reviewing strategy position and direction of the company.

I think it is therefore important to evaluate the environment opportunities in relation to the strengths and weaknesses of the organisation resources.

Strengths: – as mentioned in the history of the company it clearly states that the Holiday Inn Corporation is a well established organisation and industry leader in hospitality. Holiday Inn is well diversified hotels in the high end, business and mid priced classes in their product mix. Holiday Inn also poses a solid integration features such as owning the companies that manufacture its furniture and has invested in online reservation travel enterprises. It also has easy access to all its customers to get information and also has a excellent reservation system.

Weaknesses: – according to my research Holiday Inn may be narrowly focused making it susceptible to the down turn in the global economy and other world wide catastrophes that could limit global travel. Holiday inn hotels may also be venerable to employee’s strikes and crack down on undocumented workers. I think the aggressive expansion policies may put the company in trouble during the global down turn. Some of the branches or franchises do not follow the holiday inn set standards, recruitment process efficient accounting systems.

Opportunities:- Holiday Inn corporation is a global pioneer in hospitality industry. Their position is strong financially and they are widely expanding all over the world. They offer an array of distinctive and specialised services to their guests. They also have an opportunity to expand or acquire a cruise line company. The holiday inn corporation should take advantage of emerging markets especially with business clients and mid priced markets. The holiday inn corporation has a strong affiliation with REIT (real estate investment trust) or similar organisation that provides a strong back up for hotels. It has a strong skilled work force all over.

Threats: – Like all other business, the major threat for holiday inn will be an emergence of a new competitor. The competitors will be more active in promoting the concept of global brand name. Holiday Inn has its own resources to sustain their global brand name. In general the hotel industry faces a threat from internet reservation channels which represents a growing share of hotel room booking. To overcome these threats Holiday Inn has its own centralised reservations system.

Looking at strategic direction of the company the mission statement says GREAT HOTELS GUEST LOVE shows that holiday inn makes all efforts to exceed their customer expectation. This statement covers all aspects on hospitality firm in a brief manner. The vision statement and the values of the company states that year after year holiday inn (IHG) and the management will be regarded as the best and most sought hospitality group. From my personal experience while working with holiday inn group I can say that they are following their vision and mission statements.

By observing their strategic formulation they have adopted cost leadership strategies. They are one of the lowest cost providers for their product. This makes many customers to become potential and loyal. They have targeted very broad market from high and society to middle and the lower one. While offering this wide variety of offers to the customers they have developed and achieved best value strategy. During my analysis on holiday inn I discovered the difficulties faced by them or in other words we can say their weakness. They faced great difficulties while entering the Asian markets. The reason behind this was they were not familiar with Asian market. To overcome this problem they had to take a strong action plan by signing a joint partnership with Asian hotel firms. This provided them a base to learn about the Asian environment and their establishment. Holiday Inns vision for the future was a property that delivers new levels of customer convenience by extending hotel systems for guest and employee access using the hotels wireless infrastructure.

RECOMMENDATIONS :-

From my analysis since holiday inn is expanding it is wise to deal with proper authorities in the respective markets where they intend to operate. The company has to accomplish and satisfy all the prerequisites for doing business. The company should also carry out a well conducted market research before penetrating the new segments of market. the company should always obtain relevant information from the target market in addition to the individual customers of organisation. A comprehensive market research is a must before granting a franchise. I think similar research should be made in areas like consumer behaviour and purchasing patterns of the market. Holiday Inn Corporation has to re-evaluate its internal environmental factors like Strengths, Weakness, Opportunities and threats to overcome with a strategic direction adjusting its mission and vision and at the same time maintaining its values. These are the few strategies that holiday inn must adopt to attract more diversified clientele. Therefore in order to survive and maintain the brand name holiday inn corporation should be consistent with their excellent service being always innovative. They should also create the role of middle managers and let them to be more innovative.

I think the biggest challenge for Holiday Inn is expansion and franchises. The main features of Holiday Inn Corporation should be put as a standard one for the franchisers to follow. Will the franchisers really set the standards followed by Holiday Inn Corporation? What are the efforts that are to be put for the franchisers to follow the standards set by Holiday Inn Corporation?

Holiday Inn is also using its technology to its advantage. The interactivity and the real time effects of communication is a good way to find suppliers.

CONCLUSION :-

Successful strategies always demand a company to choose the market in which their unique capabilities will gain competitive advantage. However the adoptive and incremental context of strategic management means that the company starting point leads the firm to a stable position. Corporate strategies of Holiday Inn have been able to use strategic management to stay in the competition in the global market. I believe that the strategies as well as the leadership styles used by the management of Holiday inn have been the major cause of their competitive position in the hotel market.

Though Holiday Inn is considered as a leader in hospitality sector there is a need of flexibility. Slight changes in the market can effect their operations of the business. They should not rely on their past success but instead they should innovative and ready for any future uncertainties.

Holiday Inn Corporation focuses on services rather than accommodation itself. I truly agree that the true asset of the organisation is the staff. The staff are the one who represent Holiday Inn hotels through their excellent services. So there is a need to make sure that the staff is always happy with the behavioural integrity of work place. The corporate strategy of Holiday Inn has been able to guide the company from challengers and opportunities that appears in the market environment in order to sustain the competitive advantage. Therefore I think the leaders of the company should continue their style to motivate their employees and become a major asset for the success of the company.

This report is going to analyse and evaluate the strategic fit of Thomas Cook plc and its critical success factors using analytical tools. The PESTEL Analysis is used to evaluate conditions in the Travel and Tourism market environment and how these conditions affect Thomas Cook plc and its competitors now and in the future. A porter’s five forces analysis will also be used to determine the competitive intensity and therefore attractiveness of the travel and tourism industry.

Introduction

Thomas Cook Travel Company was first started by its namesake in June of 1841 and has since become the world’s most recognisable name in the travel industry. The merger of Thomas Cook AG and My Travel Group plc on June 19th of 2007 produced Thomas Cook plc, making Thomas Cook the second largest leisure travel group in the UK behind TUI Travel plc its major competitor. Thomas Cook specialises in providing a wide range of package holidays to destinations. (Thomascook.com)

INDUSTRY ENVIRONMENT ANALYSIS (Task A)
PESTEL ANALYSIS

The PESTEL frame work categorises environmental influences into six main types which are political, economical, social, technological, environmental and legal (see appendix A). The PESTEL framework helps managers understand the key drivers of change and also the differential impact of these external influences and drivers on the industry, markets and individual organisations. (Johnson, Gerry, 2005).

Political factors – According to CIPD, coalition government’s spending cuts are going to result in 0.7million job losses in the public sector. The travel and tourism industry is in the public sector; therefore their employees are faced with fears of redundancy. Announcement of redundancies will invariably have an adverse impact on morale, motivation and productivity of remaining employees. The negative effects can be reduced by sensitive handling of redundant employees and those remaining and to be as honest as possible with the remaining staff to gain back their trust and confidence. (cipd.co.uk)

Economic factors are of concern to travel and tourism, because they may influence demand, costs, prices and profits. Package holidays are an income elastic business, as income decreases or rises; it can have a significant effect on the demand. Therefore looking ahead, public sector cuts are likely to have a major consequence on the travel and tourism industry.

Social Factors – Redundancies and other government cuts will potentially result in limited disposable income for consumers. According to Mintel, some 12% of consumers are spending nothing on non-essentials, with 35% describing themselves as ‘very cautious’, 30% as ‘quite cautious’, and only 5% as ‘not at all cautious’. This is because of the decrease in disposable income. If income decreases, then spending will become more cautious, especially on income elastic items such as package holidays, therefore reducing profit margins for the travel industry. With all the package holidays in the UK, supply will remain very high as demand decreases forcing companies to reduce their prices.

The spending cuts will mean that business executives will have to cut their budgets and most likely use low-cost travel planes such as Easy Jet and Rynair. Video conferencing is improving all the time, and the price has fallen to zero using online systems such as yahoo messenger, business may be forced to use this method to communicate to reduce their costs. This going to affect the travel industry a lot, executives provide business anytime of the year whilst holidays are seasonal. This will reduce customers. If classy seats are either vacant or earning less revenue, this means less departures or soaring economy class fares. Companies will also be forced to provide bargains for leisure travelers willing to upgrade to business class.

Technological Factors – The most powerful example technology is the emergence and improvement of the internet, which led to reduced costs and increased operational efficiency within the tourism agencies and airports. Because the internet is becoming better every day, it’s causing intimacy between tour operators and clients and improving contentment for both parties. Aside the internet, other major technologies that support the continuous growth of the tourism industry are those implemented by transportation, which is becoming safer, quicker and more pleasing. The technological implementations within tourism operations have led to changes in working behaviour and will also result an increase of demand for labour force, implying as such that educational institutions place more emphasis on teaching tourism.

Environmental Factors – Protecting the environment is one of the most talked about and sensitive matters today, making environmental responsibility part of the factors that determine a tour operator’s success. According to global warming 2020, ‘aviation which ferries hundreds of thousands of tourists across the globe is of great concern to those seeking to protect the environment. A major concern for the industry is greenhouse gas emissions and their implication for climate change. Aviation produces at least two percent of emissions. One way the aviation industry is working on this problem is by rolling out newer planes that have fuel efficient engines which means less carbon emissions. However not all airlines especially in the poorer countries can afford buying new aircraft’.

PORTER’S FIVE FORCES ANALYSIS

Porter’s five forces analysis (see appendix B) was developed to as a way of assessing the attractiveness of different industries. The five forces constitute an industry’s ‘structure’. (Johnson, Gerry, 2008)

Threats of substitutes

The lack of disposable income and the effect of coalition government spending cuts are likely to change consumer spending habits, as a result with a significant shift in demand from luxury goods to inferior goods which are much more affordable, consumers are likely to shift to local and cheaper holidays and may choose to use trains (eurostar) or their cars to local holidays. Terrorism has affected the mentality of travellers and has made travelling more difficult and uncomfortable. People have to think about security issues from when they start packing to when they reach their destination, this will convince more travellers to use trains or holiday locally. This is however a moderate threat because customers usually prefer airlines because they are much quicker.

Competitive Rivalry

The Travel and tourism industry occupies a big segment of the business market and therefore provides many opportunities for tour operators; however it’s a very competitive industry. To be successful a package holiday company needs to discover the best fit between their individual skills, competencies and resources and external market characteristics to make sure that they stay on top of their game. Brand recognition and strength also determine the success of a company against its competitors, especially if times are tough in the economy.

Negotiating powers of buyers

Demand in package holiday industry is extremely elastic; this means that buyers will not just accept a given price by a package holiday company. Customers will use any information sources available to them such as the internet to look for better and exclusive deals available around, and with so many package holidays available in the UK, they are likely to find one and use a different company. As discussed above about the effect of economy on the travel industry, the powers of buyers are that they have a huge influence on the setting of prices in accordance with the prices which are around in the market.

CRITICAL SUCCESS FACTORS

Critical success factors are used to identify key factors that a business needs to focus on to ensure that their business is successful.

To survive and prosper, all industry participants must use an emergent strategy. Emergent strategy is a way of action that develops over time in an industry without a specific mission, goals or long-term plans. Emergent approaches should be thoroughly analysed in the context of an increasingly active, highly competitive and global business market. Influential external forces mentioned in the PESTEL analysis are pushing companies to reduce costs, improve processes and identify new opportunities for growth and an emergent strategy will help companies cope with these factors.

An emergent approach leads to more creative and responsive strategy making which is well suited to the hyper-competitive and unpredictable environments such as the package holiday industry. It is more suited to instigating positive, transformational organisational change such as diversification or restructuring. It also has the added benefit of helping to reduce resistance to change as it allows time to build employee support while the strategy is taking shape. (powerfulwords.co.uk)

Strategic concepts in tourism, hospitality and events

Individual assignment: Grande Bretagne Hotel Athens; External business environment

INTRODUCTION

No company in the world is working standalone and in isolation. That’s even more emphasised in the tourism industry where the location of the tourism companies follows the location of the tourism product, the tourism destination. A hotel can not be located standalone in a no attractive tourism destination and expect success, it should be as close to the epicentre of the tourism happening and movement. The problem is, every tourism company wants that, and they all have to compete in the saturated, consistent market with each other and with the environment like a whole.

In this assignment we will discuss the challenges and implications of the external environment applied to our hospitality organisation of a choice based on the selected theoretical model. Further evaluate the competitive environment using the Porter’s Five Forces Model with closing recommendation for the future of the business.

BRIEF DESCRIPTION OF CHOSEN SUPPLIER

For the purpose of this assignment we had chosen the New Hotel Athens.

New Hotel Athens (formerly Olympic Palace Hotel), along with 4 other hotels, is a part of Yes Hotels chain, and they are part of the worldwide Design Hotel company with more than 250 independent hotels in over 50 countries worldwide. (http://corporate.designhotels.com/about_design_hotels)

Situated in Plaka area in central Athens, New Hotel is a 79 room establishment designed by the Brazilian award winning design duo Fernando and Humberto Campana. The hotel also sports exquisite all-day bar-restaurant, New taste, and Workshop Floor, meeting space with teleconference facilities.

IDENTIFICATION OF FACTORS ISSUES IN THE EXTERNAL ENVIRONMENT (MACRO ANALYSIS)

Business environment refers to those factors of the surrounding of business enterprise which have influence on the functioning of a business. The business cannot control these aspects but can respond to change if needed. This is also call macro environemnt.

(http://books.google.gr/books?id=nfADHVmJkTUC&pg=PA3&dq=external+business+environment&hl=en&sa=X&ei=jiJvVNnjHJP5asqEgvgL&redir_esc=y#v=onepage&q=external%20business%20environment&f=true)

External business environment

Economic conditions

Economic conditions are global as well as national, and when there is a global financial crisis as in 2007, and the recent one, changes in the external environment can be dramatic. Positive economic condition of the nation have also positive effect on their spending habits. And opposite, when the nation is suffering financial hardship, the money that will be spent for recreation and holidays will be less. Indirectly, the negative economic condition increase the unemployment rate and the interest rate and taxations.

New Hotel Athens, operates within the EU and Greek economic environment. Considering the not so positive economic condition of the country and the Euro zone generally, we can say irrefutable that it reflects negatively on the business. After a calamitous recession in which the economy shrank by 30%, government debt now stands at 174% of GDP and the budget deficit last year was almost 13% of GDP (The Economist 2014). This leaded to aggressive rise of the taxes, increased interest rate for bank loans and credits and overall increase cost of the raw materials and imports.

In the table below we can see the country’s economic freedom index and few other economy related facts and figures like, the the freedom of corruption, fiscal freedom, business, labour and trade freedom etc. (The Heritage Foundation 2014)

Greece, Economic Freedom index 2014 – Source The Heritage Foundation

Regardless of the present adverse condition in the country, there is a positive forecast for the future economy of the country from international and domestic experts. High government official also promised a new taxation “roadmap” that would be unveiled in the future, with the maximum income tax cut to 32 per cent from 42 per cent and the corporate tax rate reduced to 15 per cent from 26 per cent. (ABC News 2014)

Market (competition)

The market/competition is a constantly amending factor in the external environment of the business. Not only that new competitors arise and other disappear, but also the existing ones are changing and adapting their marketing strategies, product lines and prices. Often those changes are not evident so the businesses must be alerted to what their competitors are doing.

Our hotel is one of the 23, exclusive 5 star hotels in the central area of Athens, excluding Piraeus and Glyfada (Greekhotels.com 2014), and one of the 176, 5 star hotels in the country. (Hellenic Chamber of Hotels 2006). In that saturated market are included as well the big international players like Starwood, Intercontinental, Hilton and other hotel chains with great influence on the market and provide fierce competitiveness. But New Hotel Athens diversificate in many ways from the competition, and their business model follows the fresh market trends providing a product for a niche tourism clients.

Technology

In the last half a century, one of the rapid change factors in the external environment and the constant pusher on the businesses and organisations has been the technological change. If the don’t react sufficiently quick to this change, they can face with the risk of losing market shares. The technological change don’t affects only on the design of the products, but as well on the delivery of service.

In the example with our hotel, we must say that this external factor is taken into consideration seriously, and even used for competitive advantage. The property is recently renovated according to the latest standards and trends, with implemented computer controlled in house systems, offering free WiFi to the customers (unlike most of the 5 star hotels), and having great interactive web page and social networks presence.

Climate change

Climate change is an insidious threat because the pace of change may be recognisable only if considered on a decade-by-decade basis. The effect of climate change will not fall equally on all nations and all businesses. Businesses that depend directly on a good supply of water e.g. agriculture, field sports will be adversely effected if climate change results in reduced rainfall. However the flow on affect of drought will eventually work their way through to all businesses in the affected community.

Legal

The most common law changes that affect business include Workplace Health and Safety, Consumer Protection, Industrial Relation and Environmental Law. But most obvious change in law through legislation is the taxation. Sometimes the taxation changes occur fast and with little warning and there is not much time for the business to prepare.

The New Hotel Athens guests are protected by the general Greek consumer protection law for all transactions you make while travelling in the country. As enterprise, the hotel is obliged to issue written receipts, that safeguards the consumer in the event of any claim or dispute with the enterprises. (VisitGreece 2014)

Media

The significant changes in the technology and the rise of the internet, reflected on the media as well and changed it from ground up. That affected deeper on the external business environment. The old channel for communication where suffocated, altered and brand new ones appeared. The businesses had to embrace this change and adapt to it as fast as possible.

New Hotel Athens following the modern media trends, had build extensive online presence all over the internet (as a medium). And had gained significant positive feedback. For example Trip Advisor, according to the votes by the customers, had awarded this hotel with the “Travelers Choice Award” for 2014 and had ranked it as number 7 out of 324 hotels in Athens. Except the booking sites, New Hotel Athens heavily uses the social media for promotion and communication with the customers and the public.

Political

Just like law, changes in the general government policy can be well notified and discussed or changes without notice. Many organisations depends on the government financial assistance and if there is a change in the government policy, those funding can be reduced or to completely disappear. Also any political instability in the country, leads to destabilisation of the society and have repellent effect on the tourism. For example the recent political crisis in Greece and the rise of the radicalism had negative impact on the tourism as a whole. Some of the media even scared out the tourists with warnings of racist attacks (Hamilton Spectator 2012). Or the few cases when the strict immigrants policy mistreated few tourists by the police in Athens (BBC 2013).

Demographic

The population changes include increasing or decreasing of the population, change in the age group proportion, change in the ethnic diversity, change in the number of two-income families, number of marriages and geographic population distribution. All those changes affects the external environment of a business. Human resources, security and mentality wise.

New Hotel Athens operates in quite diversive demographic environment that just adds to the colourfulness of the business.

USING THEORETICAL MODELS TO SUPPORT THE DISCUSSION?????

PORTERS 5 FORCES (MICRO ANALYSIS)

Porter five forces analysis is a framework to analyze level of competition within an industry and business strategy development. It includes three forces from ‘horizontal’ competition and two forces from ‘vertical’ competition. Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment (Porter 1980).

The Porter’s Five Forces is a powerful and simple tool for understanding where the power lies in a business situation. Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations.

Porter’s 5 Forces (Source Wikimedia)

Supplier Power:

The bargaining power of suppliers is also described as the market of inputs. Suppliers of components, raw materials, labor, and services to the firm can provide power over the firm when there are few or no substitutes. Suppliers may refuse to provide those supplies to the firm or charge high prices for the unique resources. Potential factors are:

Supplier switching costs, supplier concentration, degree of differentiation, substitute, labor unions, supplier competition etc.

New Hotel Athens, being part of the YES Hotels chat and part of Design Hotel chain, can maintain wide supply chain due to the dispersed suppliers connection of the sister companies and the mother company. If there is leak of supplies from one source, they can easily switch to other supplier connected to some of the other properties or globally with the mother company, Design Hotel Chain. From F&B materials to technology. Though, thats not applicable to the suppliers who provide unique supplies to the hotels.

Buyer Power:

The bargaining power of customers, is described also as the market of outputs. It is the ability of customers to make a pressure over business, therefore to affects the customer’s sensitivity to price changes. The companies can take measures to reduce buyer power, such as introducing a loyalty program and promotions. If the buyer have many alternatives then his power is high and opposite. Potential factors for this are: buyer concentration, buyers switching costs, buyer information, substitute products, barganing leverage, buyers price sensitivity etc.

Competitive Rivalry:

For most of industries the intensity, competitive rivalry is the biggest determinant of the competitiveness of the industry. Potential factors includes: Innovation, advertising, competitive strategies, company concentration, degree of transparency etc.

Threat of Substitution:

The existence of different products that can satisfy the same need, can make the customers switch to alternatives. Potential factors here includes: the propensity to substitute, price performance of substitute, buyer switching costs, product differentiation, number of substitute products available, ease of substitution, quality depreciation etc.

Threat of New Entry:

Power is also influence by the ability of companies to enter the market. If it does not cost much time or money to enter the market and compete effectively, if there are few economies of scale in place, or if there is little protection of the key technologies, new competitors can quickly enter the market and weaken the existing business position.The following few factors can affect on how much new entrants can be a threat: existence of barriers to entry, government policy, capital requirements, absolute cost, economies of scale, product differentiation, brand equity, expected retaliation, access to distribution, customer loyalty, industry profitability etc.

BASED ON THE ANALYSIS, FEW REALISTIC RECOMMENDATION FOR CHANGE

Conducting macro and micro environmental analysis we can come up with some conclusion …

Carnival Corporation plc is a global cruise company, with a portfolio of 12 brands. It is one of the leading cruise operators in both North America and Europe. The company primarily operates in the US, the UK, Continental Europe and Canada. The company recorded revenues of $11,839 million during the fiscal year ended November 2006, an increase of 6.7% over 2005. The operating profit of the company was $2,613 million during fiscal year 2006, a decrease of 1% as compared to 2005. The net profit was $2,279 million in fiscal year 2006, an increase of 1.2% over 2005.

Carnival’s mission statements reads, “Our mission is to deliver exceptional vacation experiences through the world’s best-known cruise brands that cater to a variety of different lifestyles and budgets, all at an outstanding value unrivaled on land or at sea”.

To be the leading cruise operator in all segments entered and to maintain the most up-to-date fleet of cruise ships in the world

To develop new cruise segments and innovative cruise packages to reach a larger number of potential and past cruisers

Employ sophisticated promotional efforts to achieve a greater awareness by the public concerning the availability and affordability of cruise travel

Attract the first-time and younger cruisers (Carnival), experienced cruisers (Holland America), upscale cruisers (Seaborne), and cruisers wanting a sailing vacation (Windstar)

Promote cruises as an alternative to land-based vacations

Provide a variety of activities as well as ports of call

Be innovative in all respects of operations of the ship

3. Strategies:

Global growth through concentric diversification via acquisition of cruise lines and building new ships, particularly in the Asia and European markets.

High quality of the service towards the customer resulting in high customer satisfaction, leading to new and repeat customers.

Economies of scale by increasing the size of the company resulting in the lowest break-even point in the cruise industry.

Horizontal growth financed through internal funds.

4. Policies:

Sophisticated promotional efforts to gain loyalty from former customers and new customers

Remodel its ships, varying offered activities, and being innovative through RD in all aspects of ship operations.

Strategic Managers
Board of Directors

Although information is not available about most of the board members, we do know that at least two members of top management are also insiders on the Board: Micky Arison (Chairman of the Board) and Howard Frank (Vice Chairman).

The stock of Carnival Corporation is publicly traded and at least 20% of privately held stock of the Arison family has been sold to fund expansion. Arison probably controls the board.

Top Management

Members of top management are as follows:

Micky Arison, Chairman, CEO, (Carnival Corporation)

Robert Dickinson, President and COO (Carnival Cruise Lines)

Kirk Lanterman, President and CEO (Holland America Lines)

Howard Frank, Vice Chairman and COO (Carnival Corporation)

Gerald Cahill, Senior VP Finance and CFO (Carnival Corporation)

Lowell Zemnick, VP Treasurer (Carnival Corporation)

Peter T. McHugh, President and COO (Holland America Lines)

Meshulam Zonis, Senior VP of Operations (Carnival Corporation)

Carnival Corporation is a family tradition passed down from Ted Arison (founder) to his son Micky (current CEO and Chairman). Micky Arison and Bob Dickinson seem to be the main driving force behind strategic decisions in the company.

III. EXTERNAL ENVIRONMENT (EFAS Table; see Exhibit 1)
A. Natural Environment

Environmental groups

Stringent regulations on ships

Environmental and health and safety regulations

Could increase costs of compliance

Instituted Safety and Environment position

EPA – studies on waste water

Annual award program

Financially supporting ocean conservation groups

B. Societal Environment
1. Economic

Unstable economy

2. Technological

Computer and information technology extremely important

3. Political-Legal

Increased regulations are issued by the Coast Guard, U.S. Department of Health and Federal Maritime Commission.

4. Sociocultural:

Growth is slowing in the cruise travel industry (2% from 1991 – 1995). It is also estimated that only 5-7% of the North American market has ever taken a cruise.

Two-income families have more disposable income to apply towards vacations.

The aging of America means more potential customers for the Holland America Line, which serves an older, more established clientele. Increased emphasis on family vacations and a growing “family” cruise segment.

Periodic political tensions which occur in cruise an area (such as the Mideast or Mediterranean) causes cruise competition to intensify in safe waters until the tensions cease.

B. Task Environment

Threat of new entrants is low, given the recent rash of cruise line failures, mergers, and buyouts.

The competitive nature of the industry makes it unattractive to enter, and high start-up costs serve as a barrier to entry.

Rivalry between competitors is high, with six major competitors (including Princess and Royal Caribbean Cruise Lines) and eight minor competitors.

With berth capacity increasing, rivalry may grow more intense if demand doesn’t rebound.

Bargaining power of suppliers (shipbuilders) is moderate since shipbuilding is a very money- and time-intensive process.

If a shipbuilder can’t deliver on a contract, Carnival can’t easily obtain a replacement ship.

Bargaining power of customers may grow in the future due to the combination of increased berth capacity and decreased demand.

The combination of these factors would lead cruise operators to offer deep discounts, and customers would have more affordable options in choosing the cruise they want.

Threat of substitutes is escalating with the introduction of all-inclusive combination cruise/land packages such as Disney’s Big Red Boat vacations.

Other stakeholders such as the American Maritime Union pose a threat, with their continued charges against Carnival (and other operators) concerning exploitation of cruise employees.

IV. INTERNAL ENVIRONMENT (IFAS see Exhibit 2)
A. Corporate Structure

Carnival Corporation serves major market segments through Carnival, Holland America, and Seaborne (joint venture).

Decision-making is centralized, with top management and the Board of Directors controlling all strategic decisions.

The corporation attempts to reduce routine decision-making by standardizing shipboard operations when possible.

B. Corporate Culture

Carnival Corporation’s culture seems to internalize the concept of providing guests with the highest service standards while keeping a firm grip on operating costs.

There is significant corporate pride regarding Carnival’s position as the leader and innovator in the cruise industry.

C. Corporate Resources
1. Marketing

Carnival Corporation’s main marketing objective is to hold on to its 44% market share in the cruise industry.

It plans to retain the leadership position through aggressive promotional campaigns by gaining loyalty from former cruisers and by being innovative in shipboard activities and operations. Carnival’s cruise product is well-defined and positioned to serve three major markets: contemporary, premium, and luxury.

Carnival Cruise Lines (contemporary) targets young and first-time cruisers with moderately priced packages which include airfare and a variety of shipboard amenities.

Prices are competitive with those of other similar cruise and land-based packages. The “Fun Ship” cruise theme markets the ship itself as the primary vacation destination, with ports-of-call being of secondary importance.

Holland America Lines (premium) is positioned to attract higher income travelers with cruise prices averaging 25-35% higher than Carnival Cruises.

HAL serves an older, more established clientele. Carnival provides additional vacation opportunities through Westmark Hotels, Westours, Gray Line Tours, and the McKinley Explorer railroad coaches in Alaska. These auxiliary tours and hotels are marketed primarily to satisfy growing demand for Alaskan land vacations in conjunction with Carnival’s Alaskan cruises.

Seaborne serves the luxury market with South American, Mediterranean, Southeast Asian, and Baltic cruise destinations.

Seaborne serves very wealthy clientele with worldwide cruises up to 98 days’ duration.

Windstar Sail Cruises serves a specialty cruise niche with ships that have small capacity (fewer than 150 guests) and can approach smaller, less traveled ports-of-call.

Carnival Corp. was the first cruise operator to advertise on television.

Carnival books 99% of its cruises through travel agents and has implemented an incentive program to reward travel agents who suggest a Carnival cruise before other vacations.

2. Finance

Currently Carnival Corporation’s primary financial consideration is the control of costs in order to maintain a healthy profit margin (greater than 20%).

Another main concern is the current expansion plan funded by internal growth.

The financial ratios show several areas that need to be addressed in the company.

Carnival has very low liquid assets, as evidenced by the low current and quick ratio, and has negative working capital, which may cause creditors to doubt whether Carnival can meet its current obligations.

Overall, the liquidity of the company is very poor but may be common to the industry since so much money is tied up in the fixed assets portion of the balance sheets.

In other areas, Carnival is doing much better with a profit margin of 22%, ROI of 11%, and ROE of 19%.

The company isn’t overburdened by debt and has two revolving credit agreements for a total of $1 billion, $815 million of which is still available for the refurbishing and building of ships.

In the past five years the corporation has experienced losses due to the discontinuation of the Fiestamarina Line and two of its hotels.

Carnival recently purchased $101 million of secured notes issued by Kloster Cruise Lid. (Norwegian Cruise Lines).

Kloster has experienced financial difficulties, and if the company fails, Carnival will be in position to claim a portion of Kloster’s assets.

A financial strength of Carnival Corp. is that it is registered as a Controlled Foreign Corporation and thus is exempt from U.S. Federal income taxes at the corporate level.

3. Research and Development

Carnival relies on RD on the part of its shipbuilders to produce faster, more fuel efficient, technologically advanced ships.

Carnival also uses service RD to implement and improve shipboard entertainment and activities to serve the disparate needs of the three market segments they serve.

4. Operations

Main operations consist of the twelve cruise lines and the auxiliary tours and hotels mentioned in the analysis of marketing.

The company expects to take delivery of ten new ships (including several “superliners”) in the next four years; seven for the Carnival Line, two for the Holland America Line, and one for Windstar. These ships will result in a 20,484 passenger increase over Carnival Corp.’s current capacity and cost $3.3 billion.

This expansion will enable Carnival to stay competitive with its rivals, who are also expanding, but if future demand remains depressed, the extra capacity could negatively affect future profitability.

The major strength of Carnival’s operations is that they are very efficient; it has the lowest break-even point of any organization in the cruise industry.

It has also been able to achieve significant economies of scale by standardizing layout and shipboard operations on its ships.

Carnival’s fixed costs make up 33% of the company’s operating expenses, and they can’t be reduced in proportion to decreases in passenger loads and revenues.

Major variable costs as a percent of operating expense are as follows: airfare (25-30%), travel agent fees (10%), and labor (13-15%).

Shipboard operations are very labor-intensive, which results in high labor costs.

Carnival Corporation’s cruises are also subject to general threats in the environment such as political conflicts and natural disasters in areas where they cruise.

Human Resource Management

Cruises are labor-intensive, requiring extensive screening and hiring of employees.

Employees work on contracts of 3-9 months and are recruited mostly from third-world countries.

Carnival has employees from 51 nations

Carnival has been cited by the American Maritime Union for exploitation of employees, but the average employment period is approximately eight years, and supply exceeds demand for all cruise employee positions.

Information Systems

Although it is not mentioned in the case, Carnival Corporation’s information system is assumed to be quite extensive, in order to record passenger reservations taken from hundreds of travel agents and to orchestrate the daily operations of this large company.

The information system also appears to give very detailed breakdowns of expenses between cruise divisions and within cost categories.

Analysis of Strategic Factors
Situational Analysis (SWOT) (SFAS Matrix; see Exhibit 3)

1. Strengths

Largest cruise operator

Strong brand portfolio

Strong geographic presence

2. Weakness

High debt burden in FY 2006

3. Opportunities

Expansion of cruise operations

growing travel and tourism in China

reopening of cruise centers

4. Threats

Economic slowdown in the US

Increased minimum wages in the US

Intense Competition

VI. Strategic Alternatives and Recommended Strategy
A. Strategic Alternatives

1. Growth Strategies: Move more aggressively into the family cruise market segment.

Pros: Taps a new, growing market with fewer competitors than the traditional cruise industry. It allows alternate use of ships that aren’t being used if future demand remains depressed. This strategy allows Carnival to keep ahead of its competitors, and the company’s low break-even point puts it at an advantage over competitors who are pursuing a similar expansion plan. Pursuing moderate expansion allows Carnival to maintain its position as the market leader. This seems to be the strategy that the company wants to pursue, and management has been successful in bucking negative industry trends in the past.

Cons: This strategy requires a new way of thinking to be successful in satisfying family needs. In addition, a lower price may be necessary to attract families who are looking for affordable vacations. Competitor Disney is a major force in the vacation industry. If demand doesn’t rebound, the industry may face price wars and deep discounts. This effect will be compounded by Carnival’s inability to cut fixed costs in the face of decreasing demand, and profitability may be sharply reduced.

2. Pause Strategy: Considering the possibility of decreased demand and the uncertainty of future demand, it may be prudent to delay contracting for any additional ships until it is apparent whether cruise demand will rebound.

Pros: The company wouldn’t be tying up capital in additional ships when demand may not merit it. This would allow the company to concentrate on refining its current operations and marketing strategy. It may also lead to an improvement in the liquidity ratios.

Cons: If demand does rebound and Carnival hasn’t ordered additional ships, there will be a time lag until it receives new ships. In addition, if Carnival’s competitors continue expansion, then the company runs the risk of losing its leadership position in the industry.

3. Retrenchment Strategy: Carnival currently isn’t in a position where retrenchment is recommended. However, if demand doesn’t rebound, retrenchment could become a necessity in the future.

B. Recommended Strategy

Recommend that the company continue to pursue its current growth plan.

This strategy allows Carnival to stay current with its competitors.

If demand remains depressed in future years, there will still be ample time for Carnival to reassess its corporate strategy as long as they don’t delay indefinitely.

IMPLEMENTATION

The recommended strategy doesn’t require any extensive changes in current programs.

Top management should closely monitor the industry and general economic trends to determine whether demand will rebound as expected.

If not, management should formulate alternate strategies that adjust to these conditions.

EVALUATION CONTROL

Carnival’s management needs to address the poor state of the company’s working capital and current ratio.

These are of concern since a low current ratio may cause the company to default on certain debt covenants.

However, the state of the working capital and current ratio may be normal when compared with industry standards, since a large portion of the balance sheet assets is concentrated in fixed assets.

The company’s information systems are sufficient to evaluate the performance of the recommended strategy and to separate costs associated with the expansion.

Carefully monitors future demand and makes necessary adjustments, I think it is in a good position to maintain its leadership position in the industry and continue to be financially successful.

IX. EFAS, IFAS, and SFAS EXHIBITS

Exhibit 1

EFAS (External Factor Analysis Summary)

Key External Factors

Weight

Rating

Weighted Score

Comments

Opportunities

Only 5-7% of N. American market has cruised

.12

5

.60

Great number of potential customers

More emphasis on family vacations

.08

3

.24

Developing market segment

Two-income family – more disposable income

.08

3

.24

Cruises are an option

Changing industry

.13

4

.42

Threats

000000.0000

00000

Slowing growth in the cruise industry

.10

5

.50

2% in 1991-1995

Very competitive industry

.20

4

.80

Six major competitors

Demographic changes

.08

4

.32

Aging population

Strong economic conditions

.15

5

.75

Threat of substitutes

.06

3

.18

air, car

TOTAL SCORES
1.00
4.05
IX. IFAS, EFAS, and SFAS EXHIBITS

Exhibit 2

IFAS (Internal Factor Analysis Summary)

Key Internal Factors

Weight

Rating

Weighted Score

Comments

New larger ships

.05

4

.20

Future over capacity

104% capacity

.10

4

.50

#1

“Fun Ship” cruise theme

.05

4

.20

Effective

Clients – only tap 5%

.05

4

.20

Hard to get rest

Strong management team

.15

5

.75

Best in industry

Marketing/travel agents

.12

5

.60

strong team

Corporate culture

.10

5

.50

Strong

Acquisitions – concentric diversification

.14

4

.56

Great acquisition

HRM – exploiting employees

.05

4

.20

Stay 8 years

Financially strong

.10

4

.40

Low B/E and cash for new ships

Market share – 26%

.10

5

.50

#1

Healthy profit margins

.04

4

.16

TOTAL SCORES
1.05
4.77
IX. SFAS, EFAS, and IFAS EXHIBITS

Exhibit 3

SFAS (Strategic Factor Analysis Summary)

Key Strategic Factors

Weight

Rating

Weighted Score

Duration

S I L

Comments

Only 5-7% of Americans have taken a cruise

.15

4

.60

X

Potential customers

Growing family vacation market segment

.10

3

.30

X

Potential customers

Very competitive industry

.15

4

.60

X

Six competitors

Escalating threat of substitutes

.10

3

.30

X

Disney

26% market share

.15

5

.75

X

Industry leader

Lowest break-even point

.15

4

.60

X

Efficient

High fixed costs

.10

4

.40

X

Standardization

Poor liquidity ratios

.10

2

.20

X

Cash-poor

TOTAL SCORES
1.00
3.75

This report is based on the strategic analysis of First Choice Holidays PLC, one of the world’s leading package holiday companies. An analysis of the company’s internal and external environments will be undertaken resulting in the researcher’s findings of the opportunities and threat that the industry faces.

A look at the industry’s competitive forces will determine show the profitability of different industries and the data found, analysed showing the different external competitive forces that affect organisation and how information can be used to counter them.

A strategic analysis of the company will show the company’s competitive and financial strength in which the company’s strengths and weaknesses will be highlighted. A strategic fit which will indicate whether the company’s mission and strategies fits its internal capabilities and its external environment.

1.0 Market Environment Analysis of First Choice Holidays PLC
1.1 History

First Choice Holidays PLC, trading name of TUI UK limited is part of the TUI Travel PLC Group of companies, one of the world’s leading travel companies, which operates in over 180 countries. The company boasts of having more than 30 million customers worldwide in 27 key source markets such as the United States, Italy, France, India and the United Kingdom. In addition to First Choice Holidays, the company has over 200 brands which are comprised of market leading mainstream brands and specialist brands.

The company operates in four sectors:

Mainstream – this is the largest sector in terms of the company’s financial performance and employee numbers. It comprises of leading tour operators and ‘power’ brands as well as it operates 146 aircraft and serves 22 million customers.

Activity – this sector has over 40 activity travel businesses that operate under five divisions which are Marine, Adventure, Ski, Student and Sport. The adventure businesses take more customers to iconic adventure destinations than any other operator and serve 1.1 million customers.

Specialist and Emerging markets – this is an international portfolio of travel businesses focusing on specific destinations, premium travel experiences or particular customer demographic segments, often with differentiated and exclusive products.

Accommodations and Destinations – this sector sells and provides a range of services in destination to tour operators, travel agents, corporate clients and direct to consumers worldwide. Some services include hotel accommodations, cruise handling and round trips for customers.

TUI Travel operates its headquarters from the U.K and employs approximately 50,000 people in over 200 travel businesses in the world.

First Choice Holidays PLC, formerly Owners Abroad (Wholesale) Limited and Owners Abroad PLC was formed in 1973. After launching an airline, Air2000, the company moved into Specialist holidays. The company was restructured and rebranded into First Choice Holidays PLC after several acquisitions and joint ventures with various tour companies and cruise liners. The group then structured itself into four sectors: Mainstream, Activity, Specialist and Online Destination Services before the merger with TUI Travel PLC in 2007. First Choice was awarded the Most Environmentally Responsible Large Tour Operator (2007-2009) from the British Travel Awards.

1.2 Vision and Strategic Goal

Since First Choice merged with TUI Travel, it shares the same vision and strategic goals. The company’s vision statement is ‘Making Travel Experiences Special’. The company’s strategic goals are to create superior shareholder value by being the leading global leisure travel group providing its customers with the widest choice of differentiated and flexible travel experiences to meet their changing needs and focusing their strategic initiatives for profitable growth. These include developing the company’s business model, continuous efficiency improvements and development of growth opportunities.

1.3 PEST Analysis

According to G. Johnson et al. in the text Exploring Corporate Strategy, PEST stands for Political, Economical, Social, Technological, Environmental and Legal. It provides a comprehensive list of influences on the possible success or failure of particular strategies that First Choice may face or is facing at present.

Political

With the government’s hiking of aviation taxes and Air Passenger Duty (APD), this causes airline tickets to be expensive, therefore discouraging prospective customers from choosing the package holiday company.

Political unrest in some countries may cause customers to decide on not travelling to that particular destination out of fear for their safety.

Impact on individual of anti-terror measures likely to increase inconvenience of some travel options.

The government’s Fuel Price ‘escalator’ is a way of government making money while protecting the environment by discouraging people to travel less.

The May 2010 British elections caused political instability with certain actions destabilising the whole of Europe.

The government can form new regulations under which these companies can operate which may or may not be positive.

Economical

The current inflation rate of the U.K is 3.1% which affects air fares, clothing, food etc.

With the rise in petrol fuel which increased by 3% above inflation, customers are feeling the pinch of this and are less likely to choose taking a vacation with any package holiday company.

The unemployment rate is at 7.7% which lowered by 0.1% over the last quarter. Having a rise in employment will raise confidence in consumer spending.

The UK Pound Sterling Exchange Rate has shown recent developments which are indeed very much favourable for the citizens of the U.K. travelling abroad. At present the UK Pound Sterling Exchange Rate has posted the UK Pound Sterling at nearly double the worth of the US Dollar, which means that when British citizens travel to the U.S. they will be able to draw double bargains for their money’s worth.

Social

The number of people purchasing on the internet has been on a constant rise. In 2009, 18.31million U.K households have access to the internet. In a survey it was found that 69% of U.K households use the internet to purchase services related to travel & accommodation.

Increased popularity of foreign travel leading leads to a boom in demand for air travel. However, this has been adversely affected by international terrorism which causes concern for the safety and security of future package-holiday makers.

The interaction between tourists and the chosen host community can be one of the factors that may affect a community as tourists may not be sensitive to local customs, traditions and standards.

People’s life style changes cause package holiday companies to now offer customised packages and online booking facilities to meet customer expectations.

Technological

Today more companies are choosing to broadcast their products via the internet. Online booking has been one of the biggest factors affecting the package holiday industry. U.K residents are now constantly using the internet to book their holiday trips which saves on time for them as well as providing convenience.

Advertising on the internet has been proven to boost sales for companies; more and more people are using the internet as a way to communicate their needs and wants to the outside world.

1.4 Porter’s Five Forces Analysis
Figure 1. The Five Forces That Shape Industry Competition

First Choice is in a very dynamic and competitive industry, the Porter’s Five Forces Model was created to show the profitability of different industries. This model is used for analysing the different external competitive forces that affect organisation and how information can be used to counter them.

The following is an analysis using the model:

Threat of New Entrants

First Choice has direct ownership of its own airline and hotels. New entrants may not have the capital for such an investment and therefore may depend on external airlines and hotels to provide their customer with a service.

New competitors may not possess the “know-how” or have the necessary experience to begin operating a package holiday business.

Government regulations provides a list of rules that new competitors have to take into consideration before beginning operation, some of which may pose a problem for beginners in this industry.

In an already highly competitive market, there will be the issue of pricing to new competitors. Pricing packages in a way that it may be attractive for holiday travellers without being too low so that it may end up running at a loss.

Threat of Substitute Products or Services

First Choice’s main competitor, Thomas Cook, has dropped its prices to compete with them for lowest priced package holidays. If successful, customers may be lead to choose that company and divert from the services of First Choice.

Competitors may not possess assets such as its own airline or hotel but offers the same services at a cheaper cost.

Destinations that the company may not have package deals for, other competitors may provide causing prospective customers to switch to the competitor’s services.

Bargaining Power of Buyers

Buyers can dictate the price of package holidays being that the industry is a highly competitive one. Buyers have a lot more choices on package holiday services to choose from.

Market research has shown that buyers are taking fewer 7/14 night packages causing package holiday companies to attempt differentiation and specialisation of certain package deals to cater to those who take shorter trips.

The threat of buyers going directly to suppliers is possible. The purchasing of airplane tickets from the airline and the booking of accommodation is an imminent threat to the industry.

Convenience is key for today’s buyers. With the internet customers would choose the company which can provide the complete package holiday service without leaving the comfort of their homes.

Bargaining Power of Suppliers

If oil prices rise, suppliers of fuel for the airlines may raise their prices.

Fuel suppliers can dictate prices for their product depending on the demand for flights. Taxes applied to the cost price of fuel can affect the cost of package holiday deals.

Suppliers will have high negotiation powers for those package companies now entering the market but for those experienced and large companies such as First Choice or Thomas Cook, there will be a balance of power.

Rivalry Among Existing Competitors

Thomas Cook, the main competitor for First Choice and parent Company TUI Travel, has joined with the company offering cheap package deals which increased the already existing price competition.

First Choice was combined with its sister company Thomson award winning airline Thomson Airline to be one of the top package holiday airline in the UK which is acquiring the Boeing 787 Dreamliner which meant it will be a fifth more fuel efficient than its competitors Flybe and Thomas Cook Airlines.

Thomas Cook offers a range of financial services that First Choice does not which includes foreign exchange services, their own prepaid currency card and the recent innovation of creating an app for the Iphone and Android phones.

1.5 Industry Life Cycle

Figure 2. Industry Life Cycle

Source: http://alife4testing.co.uk/

This model is used to showcase which stage the package holiday industry is at current. The industry is currently in the ‘Shakeout’ stage of the lifecycle. The barriers to entry are currently high, economies of scale have been achieved, forcing smaller companies to be acquired by bigger companies such as TUI Travel and Thomas Cook or exiting all together.

1.6 Critical Success Factors (CSFs)

The Critical Success Factors of the package holiday industry will highlight the key factors that present and upcoming companies should focus on that will bring satisfactory results, therefore ensuring successful competitive performance.

Creating a consolidated market – Combining companies or products into one provides opportunities for significant cost savings as well as revenue synergies.

Having more direct ownership of airlines and accommodation suppliers.

Having successful product differentiation will attract more customers from segments such as university students.

To raise awareness, influence choice, change behaviour, and develop and promote new products to encourage responsible holiday choices.

Maximised web sales and content.

1.7 Opportunities and Threats of the Market Environment

Having analysed the market environment of the industry, the following will highlight the various opportunities and threats the market faces.

INDUSTRY
Opportunity
Threat

To consolidate the market by taking over smaller companies.

The opportunity to come up with new innovative products/services because of the changing consumer market.

To build new capital to purchase assets such as aeroplanes and cruise ships, reducing dependency of suppliers with that mode of transport.

New mergers and strategic alliances to promote the maximisation of synergy profits.

To maximise on the use of the internet market, to make it more interactive for consumers.

Low cost airline competitors such Ryanair and EasyJet has relatively low prices.

Natural disasters that may occur at destinations or the home country.

People owning foreign property won’t be willing to take a full package holiday, just a cheap flight.

People booking their holidays for themselves and not through the package holiday companies.

Threat of terrorist attacks may change a customer’s perception on safety when travelling.

Table 1. The Opportunities and Threats of the Package Holiday Industry

Having analysed the market environment of the industry, this paper will now take a closer look at First Choice Holidays PLC’s strategies which will explain the company’s various operations and the resources to get it done.

2.0 Strategic Analysis of First Choice Holidays PLC

Strategy is concerned with matching a firm’s resources and capabilities to the opportunities that arise in the external environment. The following shows the strategic analysis of First Choice and the tools used.

2.1 Value Chain Analysis of First Choice Holidays PLC

A Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business.

Figure 3. Michael Porter’s Value Chain Model

Source: http://www.12manage.com/images/picture_porter_value_chain.gif

The following is the value chain analysis for First Choice Holidays PLC:

Inbound Logistics

Providing all working material for travel shops and tour operators.

Printing of travel brochures.

Liaising with suppliers of fuel for Thomson aircraft.

Liaising with financial institutions for the supply of various foreign exchange currencies to be made available online and at First Choice travel shops.

Communication with various hotels and other sources of accommodation.

Hiring of security for airport parking facilities.

Operations

Booking and pre-payment of hotels and other sources of accommodations for clients at various destinations.

Liaising with different tour operators, transport and excursion providers.

Booking and pre-payment of excursions providers.

Updating the travel website for online booking.

Securing flights for various destinations.

Liaising with insurance company, Mondial Assistance (UK) Ltd., for travel insurance for customers.

Fuelling of aircraft for flights.

Ensuring there is enough on board staff for flights.

Outbound Logistics

Distributing brochures to customers.

Distribution of airline tickets or cruise ship passes to customers.

Marketing and Sales

Online booking as well as a pre-departure website for new and existing customers.

The availability of 300 travel shops spread conveniently across the UK.

Advertising of the company and airline by television and print also on the company’s website.

Call centre staff are readily available for customer support.

The offering of special package deals at a lower price.

Existing customers’ sharing their experiences about the company through word-of-mouth.

Service

The service of travel insurance for all customers.

Airport parking so that customers can safely use their vehicles and park instead of hiring alternative transport to get them to the there.

The service of Traveller’s cheques is provided to customers who want to purchase foreign currency.

Seats on the plane can be reserved before customers travel, making it easier and more comfortable for a family to sit together.

Car hires are organised for customers in need of transport during their holiday.

Qualified child care-takers or nannies are provided to customers equipped with toys and other equipment from respected UK brands such as Crayola and Little Tikes.

Firm Infrastructure

The following departments make up First Choice’s company infrastructure.

Sales

Marketing

Finance and Admin

Human Resources

Support

Engineering and Research

Operations

IT and IS

Human Resource Management

Employees are trained to be knowledgeable about the industry and company.

Training is done for employees so that they can assist customers with choosing the perfect holiday option for their budget.

Nannies for baby-sitting services are trained and qualified with NNEB/CACHE (or equivalent).

Air hostesses are equipped with the necessary first aid and situation response training.

Technology Development

Continued development online booking and interactive websites such as the pre-departure site.

Outbound dialler system was installed to automate the call-in service for agents, giving them guidance through the many services and products First Choice has to offer.

A browser-based management information system enables management to access operational and business information to monitor how calls are made.

Procurement

Research on various locations for new accommodation according to customers’ needs and wants.

Communication with vendors and other tour operators.

Acquisition of the necessary technology needed to run the company.

The purchasing of new aeroplanes for flights to more destinations at a greater speed.

2.2 The Strategic Capabilities of First Choice Holidays PLC

An organisation’s strategic capabilities are its capacities, resources and skills that create a long-term competitive advantage. The following shows the strategic capability of First Choice.

2.2.1 Resources and Competences

Resources
Competences

Threshold

Capabilities

Threshold resources

Tangible

300 travel shops in the U.K

14,000 employees

Airline – First Choice Airways

Expedition cruise ships

Over ?2 billion in assets

Intangible

4th largest package holiday company

Brand strength

Owner of several market leading brands such as 2wentys & Falcon

Online booking website

State of the art communication systems (MO Communicator)

A contributor to an ?13.8 billion revenue

Threshold competences

Deployment of travel shops in various key areas in the U.K.

To create a market leading presence in the Russian market through joint ventures

The introduction of Microsoft Office Communicator to implement an IP-based voice network to deliver better customer service.

Enhancing customers’ experience online by ways of after-sales services

Investments such as yachts, aeroplanes and expedition cruise ships that provide First Choice with a greater competitive advantage.

Capabilities for competitive advantage

Unique Resources

Tangible

Boeing 787 Dreamliner aeroplanes that are able to go greater distances and offers greater fuel efficiency.

First Choice Holiday Village designed for families and a 5-star spa concept for couples.

Intangible

Powerful brand with the merger with the largest leisure company in the world.

37 years in the travel and leisure industry.

Relationships with suppliers to retain 150 million bed nights per year.

Core Competences

Operational profitability which allows First Choice to respond to changes in the trading environment.

Possessing profitable capacity by having individual flight allows the company to determine optimum seat capacity by each U.K airport and to ensure the most appropriate aircraft fleet size and type are maintained.

Consolidation of aircraft fleet as a fuel conservation measure and to reduce the company’s direct carbon footprint.

Table 2. Resources and Competences of First Choice Holidays PLC

2.3 The Financial Analysis of First Choice

Following a look at the company’s resources and competences, a brief analysis of the company is needed to see where it stands in the industry. First Choice is a part of TUI Travel PLC, therefore shares in the group’s profitability. Having merged with the group, First Choice has contributed to ?93million in synergy profits as well as the group’s overall revenue of ?18.6billion.

The following shows a break-down of the company’s financial capability in the following areas in 2009:

2.3.1 Profitability

Gross Profit Margin – This is used to assess a firm’s financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. The company’s Gross Profit Margin stood at 8.4% in 2009, an improvement of 1.1% of the previous year. This shows that the company’s pricing strategies have been effective.

Net Profit Margin – This is used to show how much profit a company makes for every ?1 it generates in revenue or sales. The company’s net profit margin stood at -0.77% which states which has improved over the previous year of -2.1%. Therefore this shows a rise in efficiency after all expenses and that have been considered.

Return On Assets – This gives an idea as to how efficient management is at using its assets to generate earnings. The company earned 0.3% from invested capital (assets) compared to 2008’s -1.4% loss. As a result this shows the company is earning more money on less investment.

Return on Equity – This shows the amount of net income returned as a percentage of shareholders equity. The company showed a 1.2% profit made from shareholder investments, a rise from the previous year -0.1%. Thomas Cook, the company’s main competitor had a higher return at 2.37%.

2.3.2 Liquidity

Current Ratio – This is used to determine a company’s ability to pay off its short-terms debts obligations. The company’s current ratio stands at 3:5 which means they can pay off its obligations should it become due at that point.

Acid Test Ratio – This indicates whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The company showed a ratio of 1:2 for 2009, which means that the company has enough liquid assets to cover an unexpected drawdown of liabilities.

2.3.3 Leverage or Debt

Debt to Equity Ratio – This indicates what proportion of equity and debt the company is using to finance its assets. The company showed a ratio of -3% which means that they were not aggressive in financing it’s growth with debt and has the ability to repay loans.

Total Debt to Total Assets – This is used to measure a company’s financial risk by determining how much of the company’s assets have been financed by debt. The company showed a ratio of 3:4 meaning that 75% of the company’s assets are financed by the creditors or debt (and therefore 25% is financed by the owners).

2.3.4 Activity (see Appendix)

Asset Turnover – This shows the amount of sales generated for every dollar’s worth of assets. The company showed a ratio of 1.5 which means for every dollar in total asset spent they gain 1.5 in revenue compared to the industry’s 0.34 ratio.

Despite a drop in revenue, the company still remained profitable and above its competition. It is seen that the company has an edge and is inviting for any investor. The following shows the companies. The following shows the strengths and weaknesses of the First Choice.

First Choice Holidays PLC
Strengths
Weaknesses

One of the market leaders in the package holiday industry both domestically and globally.

Technologically advanced, creating new ways using technology to make decisions on their own without going physically to an agent.

Offers a wide range of comprehensive services that customers enjoy.

Ability to consolidate the market.

Inability to fully penetrate the Western market resulting in dependency on the European market for revenues.

As at August 2010, there was a consistent decrease in bookings following the recurrence of airspace closures, the emergency budget and the UK weather.

Accounting errors on the part of executives.

3.0 The Strategic Fit Analysis of First Choice Holidays PLC

Strategic fit indicates how well the First Choice Holiday’s mission and strategies fit its internal capabilities and its external environment. First Choice is the 4th largest package holiday company in the UK. Its main competitors are Airtours, Thomas Cook and its sister company Thomson Holidays, currently Thomsons dominates the industry.

According to Investopedia, competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. The more sustainable the advantage, the more difficult it is for competitors to neutralize the advantage. It is the company’s competitive advantage that allows it to earn excess returns for its members. Having a competitive advantage is important to First Choice because without it, the company will have no economic reason to exist and will just simply wither away. Through the analysis done in this essay, although First Choice is ranked as #4, it still holds an advantage on its competitors.

First Choice used the strategy of backward integration, meaning the company purchased suppliers in order to reduce dependency. An example of this would be its own airline and the First Choice Holiday Village. The acquisition of new aeroplanes, the Boeing 787 Dreamliners, would prove to be a major advantage as consumers are now taking responsibility for the environment and with these aeroplanes; the company will showcase environmental performance by reducing their carbon emissions. Having these assets will give First Choice the advantage of delivering products or services of a higher value at a cheaper price, as a result gain cost leadership.

Using the internet for online sales has maximised their profits also the company retained their customers while gaining new ones. The company’s liquidity and financial situation is stable despite a drop in revenue in 2009, with that they are capable of market consolidation. An example of that would be the acquisition of C.I.T Holidays, a UK based company with extensive operations in Spain and Italy.

First Choice has a long history within the industry along with experience. They have proven to be well prepared to any changing environment. The company has achieved high economies of scale because of its access to larger market allowing them to operate with greater geographical reach. They have the ability to create value for money to its customers and have shown to be innovative by way of creating differentiated products such as its pre-departure website, an after-sales service.

3.1 The SWOT Analysis of First Choice Holidays

The SWOT Analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment it operates.

First Choice Holidays PLC
Strength

One of the market leaders in the industry.

Ability to offer differentiated products/services.

Commitment to customer service.

Wealth of knowledge of the industry.

Backward Integration which made them spread across the value chain.

Strong distribution channels, the strongest being online sales.

Weakness

A 13.5% reduction in package prices because of a decrease in sales as a result of the recession and events such as the volcano ash disruption in mid-April 2010.

A loss of ?69million in revenue in 2009 compared to the year before.

Opportunities

Further expansion through acquisitions and mergers.

With new mergers and alliances, an opportunity to create synergy profits arise.

Threat

Airlines and hotels are now offering package deals.

Threat to Thomson Airlines from low cost airlines such as Ryanair.

Terrorist threats or attacks will change customers’ perception of safety when travelling.

In conclusion, First Choice Holidays PLC is strategically fit and has a high advantage over the competition. The company is seen to be attractive for investment, although their profits fell for the previous financial year and sister company Thomson Holiday still stands at number one, but with new products underway, there may be a positive change.

The author has to strategically evaluate Accors expansion plan of adding 10,000 rooms per annum in total during two years (2007-2008) in both established market chosen as United States of America and emerging market chosen as China. The author will also review the marketing, financial strategies that Accor has adopted in these markets till now and then suggest future strategies to expand in these markets. The author will also be suggesting about the brand that Accor should look forward to expand.

Accor is a large French multinational corporation operating in nearly 90 countries and Accor Hospitality, the Accor hotels branch, has more than 4,000 hotels worldwide. It starts from the most luxurious hotels to the most economic lodging solution. Under its belt there are brands like sofitel, novotel, mercure, ibis, red roof inns, etap, motel 6, studio 6 and formule 1. The group is looking to expand its hotel business in an established (USA) and establishing (China) market by adding 20,000 rooms over the period of two years. The author has to strategically evaluate and make suggestions to the group.

With a corporate representation throughout the world, Accor Hotels have become one of the largest players in the industry. It is an intricate organisation with multiple brands and qualifications of hotels, as well as supplementary products and services. Accor finds it important to incorporate the small and medium-sized hotels in managing customers’ needs and requests as they are the direct link to the customers.

Accor is a large French multinational corporation operating in nearly 90 countries. Accor is the European leader in hotels (Accor Hospitality) and a global leader in corporate services (Accor Services). Accor Hospitality, the Accor hotels branch, has more than 4,000 hotels worldwide. It starts from the most luxurious hotels to the most economic lodging solution.

(Reference: http://www.fundinguniverse.com)

Aims & Objectives: This report aims to develop international expansion plans for Accor in established and emerging market in the given span of time during the year 2007-2008. The objective is to provide rationale for the selection of markets, and propose branding, finance, and marketing strategy to the Board of ACCOR to add an additional 10,000 rooms per annum across both established markets (Europe, including France and North America) and other areas of the world (Latin America, Africa, Middle East and Asia/Pacific).

Research Methodology: This report is based on the case study for the ACCOR group of hotels which is from the module study guide and is a piece of research by the “The Centre for Hospitality Research at Cornell University”. The various secondary sources accessed have been as following: internet, journals, professional reports, government reports and others to produce data for the targeted markets.

In 1967 Gerard Pelisson and Paul Dubrule opened their first Novotel hotel on a roadside near Lille in northern France. Travel was booming in France in the 1960s and the hotel industry had not yet expanded to meet the demand. French hotels, in general, were either rural inns or luxury hotels in city centers. Dubrule decided to build American-style highway hotels in the medium price range and collaborated with Pelisson, a former head of market research at IBM-Europe. Through Pelisson’s connections the partners were able to secure a bank loan, and the Novotel firm was launched. The company’s ensuing success was in large part due to its being first to break into the unexploited European market for highway lodging. Each Novotel provided standardized rooms, ample parking facilities, and restaurants featuring local cuisine. Soon Novotels also were established at airports and popular vacation sites, such as the seaside and mountain areas.

The acquisition of the Mercure hotel chain in 1975 pushed the company into metropolitan areas and the business traveler market, and these hotels varied according to regional demands in style, character, and restaurant offerings. By the end of the 1970s Novotel had become the premier hotel chain in Europe with 240 establishments in Europe, Africa, South America, and the Far East.

Accor’s brand worldwide
Formule1

Lowest rates on the market.

Functional room for one,

Two or three people.

All-you-can-eat breakfast buffet.

Round-the-clock check-in.

Etap

Pleasant convenient room for one, two or three people.

Budget price.

All-you-can-eat breakfast buffet.

Round-the-clock check-in.

Motel 6

The lowest price of any national chain.

Red Roof Inn

Renovated product.

Low rates.

Comfortable beds.

RediCard Preferred

Member loyalty program.

Ibis

Simple, reliable pricing policy.

Always very well situated, in city centres, close to airports or near major tourist or business areas.

Service quality (ISO 9001 certification and 15-minute satisfaction guarantee).

Environmentally friendly waste, water and energy management systems.

Teams on duty around the clock.

Breakfast served from 4:00 a.m. to noon.

Hot snacks available at any time.

Mercure

Shared values, such as a strong regional focus, a unique personality and an exceptional wine list.

For business and leisure stays, in city centres, at the seaside or in the mountains.

Novotel

Open spaces featuring contemporary design, for rest and relaxation.

Bright, spacious, pleasant rooms where guests can work or unwind in a comfortable setting.

Customers can eat whatever, whenever and wherever they want.

Offers adapted to the needs of all travellers.

Suite Hotel

Innovative, modern concept.

30-square-meter modular suites.

With Boutique Gourmand, food can be purchased around the clock in the hotel lobby.

Free relaxing massage every Thursday evening.

The longer the stay, the lower the price.

Smart cars made available free-of-charge to medium-stay customers.

Sofitel

Prime locations in leading business centres and resorts.

Each hotel is unique in its design, architecture and culture.

Sofitel’s exclusive MyBed concept, the guarantee of a good night’s sleep.

Restaurants offering innovative, contemporary cuisine that surprises diners, awakening their senses and stirring their emotions.

Hotel Distribution Worldwide

Accor has its 4,000 hotels in 90 countries. It has its presence all seven continents and in all mojor cities. (Reference: www.accorhotels.com)

Europe
Africa
Asia
Australia
North America

Andorra

Algeria

Cambodia

Australia

Canada

Austria

Benin

China

Fiji Islands

Mexico

Belgium

Burkina Faso

India

French Polynesia

USA

Bulgaria

Burundi

Indonesia

New Zealand

Cyprus

Cameroun

Japan

Norfolk Island

Czech Republic

Chad

Laos

France

Egypt

Malaysia

Germany

Equatorial Guinea

Philippines

Greece

Gabon

Singapore

Hungary

Ghana

South Korea

Ireland

Guinea

Thailand

Italy

Ivory Coast

Vietnam

Lithuania

Mauritania

Luxembourg

Mauritius

Monaco

Morocco

Netherlands

Nigeria

Poland

Reunion

Portugal

Rwanda

Romania

Senegal

Russia

South Africa

Spain

Tunisia

Development strategy

Accor’s hotel business has continued its sustained pace of development. Most importantly, they devised a new, more efficient business model based on two foundations:

Stronger brands those are now more visible, more attractive and more strategically aligned.

An “asset right” real estate strategy, which consists of adapting operating structures to the profile of each country and market segment.

Pelisson and Dubrule developed their expanding company with a decentralized management and a unique dual chairmanship. Although to comply with French law the partners took turns holding the official position of chairman, they made all decisions jointly and shared responsibilities, immersing themselves in all aspects of the business. The company’s specialty became variety, providing hotel chains to fit every need. In 1973 Sphere S.A. was created as a holding company for a new chain of two-star, no-frills hotels, called Ibis; the first Ibis was opened the following year. During this time, the company also acquired Courte Paille, a chain of roadside steakhouses founded in 1961, which reflected many of the same priorities as Novotel: practicality, easy parking, consistent quality, and quick service.

(Reference: http://www.fundinguniverse.com)

Accor expanded at a far swifter rate than its international rivals, becoming the largest operator in Europe. It led the market in France and West Germany, and expanded in the medium and economy range in Spain, Italy, and Britain with its $75 million investment budget. The company’s European base provided three-quarters of its revenue, with more than half coming from hotels and the rest from its foodservices.

(Reference: http://www.fundinguniverse.com)

In 1997, Dubrule and Pelisson decided to retire from active management and were succeeded by Jean-Marc Espalioux. Espalioux’s new management team focussed on relocating Accor’s cash. In an effort, to deleverage themselves and free resources to provide for expansion, Accor disposed of a‚¬3 billion of real estate assets as part of a sale and leaseback programme.

(Reference: http://www.fundinguniverse.com)

Business Mix

Accor S.A. operates in hotels and services sector worldwide. It provides luxury and upscale, midscale, and economy hotel services. It also designs, develops, and manages prepaid solutions, including food vouchers, welfare and assistance programs, family assistance solutions, gift vouchers and cards, loyalty programs and incentive campaigns, and expense management services to corporate clients and public institutions. In addition, the company operates restaurants and casinos, as well as provides onboard train services to the railway sector. Accor was incorporated in 1960 and is headquartered in Evry, France.

Financial Performance

Profit before tax rose to a‚¬727 million in 2005, an all-time record, and the Group’s balance sheet was more solid than ever. Based on these results, shareholders will be asked to approve an ordinary dividend of a‚¬1.45 per share, a 26.1% increase, plus an exceptional dividend of a‚¬1.50 per share, representing a total payout of a‚¬320 million. This dividend policy is accompanied by a share buyback program that has had a positive effect on earnings per share. (Reference: www.accorhotels.com)

Accor’s 2006 results were excellent, as can be seen in three key figures:

aˆ? Revenue rose by 6.6%, the biggest increase since 1998.

aˆ? Profit before tax rose by 28% to a‚¬727 million, a record.

aˆ? EBITDAR margin, at 27.4%, was our highest ever.

These figures prove that Accor is developing fast and enjoying very good financial health, as illustrated by their low level of debt. Another reason for satisfaction is that these improved results concern both the Services and the Hotels businesses. For the year, revenue was up 15.5% in Services and 6.1% in Hotels. And, if 2006 was a very good year, the outlook for 2007 is also very encouraging. With the two businesses’ growth potential, the economic turnaround (especially in Europe with the upturn in the hotel cycle) and the emerging markets of China and India, they have every reason to be optimistic. For 2007, Accor is on track to step up the pace of growth, with the goal of adding 200,000 rooms by 2008. (Reference: www.accorhotels.com)

Strategy

Very quickly too, it became apparent that there was a need for a clearer strategy that would enable the Group to more accurately identify its development priorities and, more importantly, focus its managerial and financial resources. In addition to this two-pronged strategic shift, senior management, under the leadership of Gilles Pelisson, outlined a sustained expansion strategy combining acquisitions, notably in the Services business, and stepped up organic growth in the Hotels business with the opening of 200,000 new rooms between 2006 and 2010, especially in China, India and other fast-growing regions. Redefining the market positioning of the brands also made it necessary to reposition the Sofitel brand and create a new non-standardized banner in the economy segment, All Seasons. The brand strategy has led to a shift away from the Accor corporate banner toward the operating brands.

Accor focuses repeatedly on a specific vision for growth and believes in sustainable, profitable growth through three pillars:

A geographically and structurally balanced portfolio

A disciplined, and results-oriented management of resources and assets

A set of powerful, aligned brands

(Ref: case study)

“The Right Approach” became Accor’s strategic vision of its Hotels division focussed on making Accor’s Hotels business more profitable, less cyclical and well appreciated by its clients:

To achieve these goals, five levers drive the “Right Approach”:

Align the brand portfolio with customer expectations (The Right Brands)

Redefine the networks around this brand portfolio (The Right Network)

Improve hotel operating performance in the reconfigured business base (The Right Operating Performance)

Adapt hotel operating structures to improve return on capital employed and reduce cash-flow volatility (The Right Asset Management) – Shift the corporate culture to deliver the best value-added services to hotel owners (The Right Service Provider).

Ownership Structure

For the lower and mid segment hotels Accor can consider giving franchises or entering in joint ventures. However, for the high end segment hotels like sofitel and novotel, Accor should maintain ownership approach as these properties have higher profit sensitivity. In 2003, Accor opened 10 new properties under these brands, and they owned or leased these new properties.

Accor should have less capital-intensive operating structures, which is a key to their success, especially in economically sensitive countries. While Accor owns and leases some properties, they also look to management contracts and franchising.

(Reference: case study)

Developed Market

For the developed market the author has chosen three developed markets from which one will be shortlisted after the analyses. The author has chosen UK, France and USA as its markets for analysis. Accor has great presence in all the three markets.

Accor has 125 hotels in UK mainly in the mid-segment. The demand for mid-segment hotels in the UK is strong and most of the Accor hotels are doing well. However, UK is not a big market compared to the US for Accor. Accor already has a good presence in the European market and hence there is limited scope of expansion. Similarly, in France Accor have a staggering number of hotels and resorts in all segments. It also has a lot of services in France. It has its strongest presence in France considering the size of France to the UK and the US. Accor already has a very good presence in France in all the segments. Hence it has little scope for growth. In the USA, Accor has motel 6 and studio 6. It is also present in the upscale market. However, it still has a large scope for expansion in all the segments as the US market is so vast and diverse. Therefore, in the developed markets, the author has shortlisted the US market for the addition of 10,000 rooms in the year 2007-08.

Developing Market

Like the developed market the author will choose three developing markets and shortlist one of them for the analysis. The developing markets are India, China and South Korea. South Korea is relatively a small country and the economic growth is not impressive enough for Accor to add 10,000 rooms in this market. Accor entered the Indian market in the early 80’s and failed miserably. Accor has few operational hotels in India mainly business hotels. However, the political system in India is somewhat chaotic as compared to China. The third market chosen is China. China is a huge country in terms of land and is the fastest growing economy in the world. It has a stable government and its foreign policies towards the hospitality industry are very friendly. Therefore, the author has shortlisted China as its developing market.

ESTABLISHED MARKET (USA)
_______________________________________________________
Rationale

The United States of America (commonly referred to as the United States, the U.S., the USA, or America) is a federal constitutional republic comprising fifty states and a federal district. At 3.79 million square miles (9.83 million km?) and with about 305 million people, the United States is the third largest country by total area and third largest by land area and by population. The United States is one of the world’s most ethnically diverse and multicultural nations, the product of large-scale immigration from many countries. The U.S. economy is the largest national economy in the world, with an estimated gross domestic product (GDP) of US$14.3 trillion (23% of the world total based on nominal GDP and almost 21% at purchasing power parity). (Reference: http://www.wikipedia.com)

Geographical Location

North America is the northern continent of the Americas, situated in the Earth’s northern hemisphere and almost totally in the western hemisphere. It is bordered on the north by the Arctic Ocean, on the east by the North Atlantic Ocean, on the southeast by the Caribbean Sea, and on the south and west by the North Pacific Ocean; South America lies to the southeast. North America covers an area of about 24,709,000 square kilometres (9,540,000 square miles), about 4.8% of the planet’s surface or about 16.5% of its land area. As of July 2008, its population was estimated at nearly 529 million people. It is the third-largest continent in area, following Asia and Africa, and the fourth in population after Asia, Africa, and Europe. (Reference: http://www.wikipedia.com)

PESTLE Analysis
Political

A seldom-stated fact of life is that without political stability it is impossible to have economic progress. Until a nation has a stable political system in place, it is impossible for people to plan their lives, conduct business successfully and go about their daily routines with any hope for the future. The United States has enjoyed 135 years of political stability since the end of the Civil War. The United States is the oldest democratic republic. This is an incredible accomplishment. It is amazing that no other country has been able to copy the American system of government successfully. It is as if that system is uniquely suited to that single country. (Reference: http://www.wikipedia.com)

With mass manufacturing long gone from America, hospiatality industry is one of the key generators of revenue. Hence the American government has given some concessions for the development and growth of the industry:

Grant of Infrastructure Status for hotels

Concession for Convention Centres

Continuation of Concessions

Depreciation rate for hotel buildings

Concession in Income Tax Act for the Hotel Industry

(Reference: http://www.capitalmarket.com)

Economical

Fortunately for U.S. hotel owners and operators, actual RevPAR improvement through the first six months of 2004 has already reached 9.5 percent. Most encouraging was the 3.2 percent increase in ADR. Record-breaking growth rates for revenues and profits are certainly welcome news for U.S. hotel owners and operators. The industry leaders have forecasted growth in the coming years for hospitality industry in the USA. Also with backing of the US government the hospitality industry is believe to show good results in coming years.

(Reference: http://www.wikipedia.com)

Social

The American population is comparatively young compared to other developed nations like Japan and Germany and a lot of young immigrant work force is also available in the country. Therefore, it is doubly beneficial for the hospitality industry, which is always on the lookout for young work force and customers. The American government safeguards the interests of its people through following agendas:

the social inclusion process

Coordination of social security schemes

Anti-discrimination and relations with civil society

Equality between women and men

Social Agenda 2005-10

(Reference: http://www.childstats.gov)

Technological

The effective use of hospitality technology is one of the key factors in providing stellar customer service, since the proper implementation of this technology helps to ensure that key aspects of service are not accidentally forgotten or avoided.

The hospitality sector in the US spent a total of $917 million in 2006 on R&D activities, compared to $784 million in 2005. As the President outlined in his State of the Union Address, the ACI commits $5.9 billion in FY 2007 and more than $136 billion over 10 years to increase investments in research and development (R&D), strengthen education, and encourage entrepreneurship and innovation. (Reference: http://www.capitalmarket.com)

Legal

The lobour laws in America are very stringent. Therefore, the hotel has to abide by the rules to avoid fines and getting into legal disputes. Some of the laws for the hospitality industry are as follows:

Common Law System

Right To Privacy

American with Disabilities Act

Safety and Security

Food and Beverage Consumption

Employment

Workplace

Contracts

Travel and Tourism

The international arrivals market for the United States has changed significantly since 2000. This goal of this analysis is to provide insights into changes affecting the top inbound markets to the U.S. The U.S. welcomed 56 million international visitors from 213 countries during 2006, up 10 percent from 2005. Total arrivals were also up 9 percent from 2000, the former record year for total non-resident visitation to the country. Arrival records were set by 72 countries, nine of which were among the top 20 inbound markets. Therefore, in 2007, the growth in arrivals was driven more from the ’emerging’ markets than the top arrival markets.

Overseas arrivals (excluding Canada and Mexico) totalled 23.9 million during 2006, up 10 percent from 2005. Travel from overseas markets accounted for 43 percent of total arrivals to the U.S. and contributed significantly to the overall growth in international arrivals in 2007. Although overseas travel is rebounding from its low in 2003 it was down eight percent from its peak in 2000 (graph below). Fourteen of the top 20 overseas markets exceeded 2006 arrivals levels by double-digits: Germany, France, Australia, Brazil, Italy, India, PRC/HK, Spain, the Netherlands, Ireland, Venezuela, Colombia, Sweden and Israel. (Reference: http://www.travelstatistics.com)

Economic Growth

In real terms, America’s economy grew by 3.7 percent in 2006, faster than most other developed economies around the globe and faster than the historical U.S. growth rate, since 1970, of 3.2 percent.

The overall level of GDP was $9.89 trillion (in 2000) when Bush was elected and $9.87 trillion in the third quarter of 2006. Exactly three years later, GDP is $10.88 trillion, a 10 percent real increase. To put that in perspective, just the growth of the U.S. economy over the past three years is larger than half of the entire French economy. (Reference: http://www.economicreform.com)

Brand Selection

Headquartered in Dallas (Carrollton), Texas, Accor North America operates more than 900 upscale and economy properties including nationwide economy leaders Studio 6 and Motel 6 and the upscale Sofitel and mid-scale Novotel and Ibis hotel locations in the U.S., Canada and Mexico. Its flagship chain, Motel 6, caters primarily to vacationing families in the US and Canada with a limited menu of amenities.

Accor’s plan for the U.S. should focus on Motel 6, Studio 6, Sofitel and Novotel brands. The company should plan to grow Motel 6 and Studio 6 aggressively. “We’re working on new prototypes for both brands,” Le Mener said. “We intend to be very aggressive with a goal to develop 70 to 75 properties a year”, Mener added. Novotel should follow the growth plan of Sofitel, which is to have properties only in the top 20 to 25 markets in the U.S. “We see Novotel as an international network,” he said.

Business travellers and families on a vacation are looking for budget hotels as they want the cheapest mode of accommodation. Accor has a great presence in the low budget segment and therefore, it should continue to grow its hold in this segment. However, it should also look at growing in other segments of the market. This will help Accor in creating brand awareness and also increase its market share in the US.

Accor in USA
Brand Hotels Rooms Managed/Franchised

Motel 6 815 85,421 127

Red Roof Inns 360 39,622 101

Studio 6 37 4,714 2

Sofitel 8 2,633 1

Novotel 6 1,835 3

Total 1,226 134,225 234
(Reference: http://www.accor.com)
Financial Strategy

Accor USA was struggling with manual account reconciliation that postponed month-end accounting for its growing number of properties. Department inefficiencies and error-prone manual processes caused delays with the identification of exceptions like missing and late deposits. High turnover at properties and reporting delays exposed the company to expensive losses with annual write-offs averaging $1.5 million. Accor USA had no process for escheatment and a 2004 audit resulted in $3 million dollars in penalties for unclaimed property that had not been filed with the appropriate states. (Reference: http://www.accor.com)

Accor USA faces a lot of financial problems that cannot be sorted out in a matter of time. It has very less cash left to fund its operation in the USA. Although, the funds from operations increased 7% to $906 million in 2005, it still struggles to keep up. Capital expenditure for renovation and maintenance rose by nearly 15% to

$326 million during the year, and represented 4.5% of revenues, versus 4.2% in 2005. Free cash flow amounted to $580 million. (Reference: http://www.accor.com)

As seen above, Accor USA’s debt is decreasing and cash flows are increasing, therefore it should concentrate on the expansion programme as the cash flows increase. However, it should focus on economy hotels like Motel 6 and Studio 6 as they require less money. To fund these projects Accor can raise cash money from equity market and some from its operations.

With its more substantial financial resources, Accor should step up the pace of growth and enjoy greater financial flexibility. The initial three-year (2005-2007) expansion budget has been increased by 39%, to EUR 1.7 billion from EUR 1.2 billion, to fund the development of various hotel projects in the U.S. (Reference: http://www.accor.com)

To improve its financial flexibility, Accor should undertake an innovative real estate management strategy designed to meet two main objectives:

Reduce capital intensity in upscale hotels.

Variable holding costs in the midscale segment.

In the upscale segment (Sofitel), Accor wants to sell the hotel properties while retaining the management contract, sometimes with a minority stake, in order to reduce earnings volatility in a segment that is more sensitive to business cycles. The objective is for 75% of all Sofitel units to be under management contract in 2006, versus 62% in 2004 and 52% in 2000. (Reference: http://www.accor.com)

In midscale hotels, fixed leases are going to be transformed into variable leases based on a percentage of revenues with no minimum guaranteed. One of the objectives is to variable a proportion of the hotels’ fixed costs.

Marketing Strategy
Accor’s big-spender approach has made it the arch-collector of brands, and some observers wonder whether the group can continue being all things to all people without diluting its focus. Nevertheless, it’s an approach that has established the French company as the world’s third-largest hotel operator, and its coverage of multiple market sectors allows it to spread the risks of a downturn in any one part of its business.
Accor group should be focussing on marketing its hotels through advertisements in magazines, television and Accor’s other services operational in the U.S. It has joined hands with various magazines and is actively participating in television adverts, which will help in marketing its product.
Many customers locate and book their Accor hotel accommodation through www.accorhotels.com and associated brand-specific web sites, where they are offered the opportunity to opt-in to an online communications programme.
Accor’s online relationship marketing strategy should aim to convert prospects into customers and build customer value through increasing the depth of relationship and growing revenues from repeat bookings, cross-sales, up-sales and referrals.
Customer relationship and marketing director of Accor Hotels, Mathieu Staat, said, “Online relationship marketing is an important, but complex activity for us. Accor have several hotel brands and offer online communications in up to five languages to subscribers across 15 target zones. They also run six different loyalty and subscription cards.

Introduction of tourism industry

The hospitality and tourism industry is the world’s largest industry that has been growing significantly in the last few years. The noteworthy augmentation of the industry is attributed to many factors such as development of easy modes of transportation, changing demands of the people to visit various destination places, increasing need for exploring adventurous and artistic places worldwide and creation of tourist destinations in numerous countries for making the tourism industry an integral part of their economies (Bender, Gidlow & Fisher, 2013; Wang, 1999).

Since the tourism industry has gained huge importance, it has become a major area of study of the leading scholarly researchers. These specialists are doing extensive studies on the industry, the factors impacting its performance and the impact of tourist role on the destination images created by the tourism authorities in each country (Lim, 2007; Prentice, 2004). In order to study various aspects of the tourism industry, one school of thought is focussing on the socio-demographic characteristics and needs related to the specific styles of vacations or tourist roles (Cohen, 1974; Kim, 2009; McCabe, 2005).

For instance, Yiannakis and Gibson (1999), cited by Nicoletta and Servidio (2012), established that the tourist role’s preference is linked to the place where a person lives in his/her adult life. On the other hand, second school of thought is analysis the impact of stereotyping of tourist role on the discriminatory practices that are created by the authorities in the destination places (Lee, Law & Murphy, 2011; Jacobsen et al., 2012). Hence, there is an enormous collection of work on the tourism industry, tourist role and the challenges faced by the players of the industry.

Contribution of researchers in tourist studies

In order to study the tourist role in the tourism industry, the researchers have utilised the ‘anthropology study’ to generate an extensive body of theory that can provide assistance in defining and delimiting the object of study i.e. tourist. The classical theorists such as Cohen (1979), Horne (1992), Kadt (2001), Pearce (1982) and Smith (1978), cited by Heimtun (2007), have ascertained the relationship that exists between guests and hosts which means that they are created by developing a series of dichotomies such as locals/foreigners, stability/transience, production/consumption and work/leisure.

Although these dichotomies do exist in the sector but it is important to conceptualize the role of tourist that has been mainly treated by the researchers in a negative way (Caru & Cova, 2003; Frankin, 2003); the primary purpose is to make some beneficial contributions can be made in the field of research. The foremost aim of the studies related to tourists is not to defend them and close the eyes towards the negative aspects of the tourism but it should also highlight the positive aspects of the tourism and address the challenges that are encountered by the tourists during their visits in the destination places (Selstad, 2012).

Various roles of tourist as depicted by researchers

For decades, the tourists have been portrayed as the second-class citizens (Burner, 2001); this feeling of being considered as a dumb or unimportant person has been impacting the treatment of tourists worldwide. According to Jack and Phipps (2005), the local residents at destination places used to believe that tourists’ activities are lazy, dumb and fatuous. However, these conventional views about tourist behaviours have been challenged and many researchers have successfully revamped the tourist roles in the destination places and the shift has been made on studying the tourist experience (Dann, 2000).

Uriely (2005) gave a review on the conceptual development of an excellent tourist experience that has received huge appreciation by the concerned authorities in the tourism industry. The researcher identified four developmental phases of the tourist roles:

The tourism should be viewed as a separate activity from everyday life routine.

There is a shift from the portrayal of tourists as homogenous people as a general form to multiplication of the depictions that are captured while tourism experience.

A shift in focus for the objects displayed by the industry towards the negotiation of meanings in subjective way for determining the level of experience.

A significant move from the decisive and contradictory academic information flow such as experience as moments of truths to harmonizing and virtual interpretations.

The main problem in theories about the experience of tourist was that they lack focus on the term ‘tourist role’. Hence, the modern theorists started studying the tourist attitudes and behaviours that were depicted by their experiences in the destination places along with the stereotypes that were created among the tourist groups belonging to similar ethnic groups, religion, race, culture and etc. (Iverson, 2010).

Stereotyping and prejudiced views of tourist role

Since many researchers classified the tourist roles on the basis of their analysis, they created certain stereotypes about the tourist roles so that the tourist studies can be flourished. For instance, Cohen (1979) classified the tourist roles into four categories i.e. the explorer, the individual mass tourist, the drifter and the organised mass tourist. Jafari (2003) emphasised that the better classification of tourist roles can be stereotyped by adding behavioural characteristics such as takes photos, visits well-known places, pleasantly purchases souvenirs, tries local food, stays for some in one location and explores numerous destinations privately.

From the studies of contemporary researchers, it is evident that they defined the role of tourists in accordance to their purpose of tourism; when there was increased focus on the tourism, there was less emphasis on treating tourist an individual. Cohen (1979) classified tourists into four broad groups such as recreational type, experimental type, existential type and experiential type. In each mode of tourism, the tourist wants to have some time off from everyday routine so that the energy can be revitalised and explore the culture and aesthetic offerings of the other countries that have distinctive norms, values and societies (Chok, Mcbeth & Warren, 2007).

The postmodern theorists have emphasised that the tourist roles have to be studied from the negotiated and subjective characteristics rather than rigid and reductionist perspectives that were done by contemporary researchers; their entire focus is on the tourist roles, meanings, attitudes and experiences. The recent terminology coined by Jacobsen and Munar (2012) is ‘anti-tourist’ attitude which shows that the tourists want to be viewed in the role of tourist but want to keep a power distance when in this role.

According to these researchers, the conception of anti-tourist role seems to challenge the tourist’s sense of individuality and identity; the role distance becomes of utmost importance to them as they want to maintain a feeling that each individual has different experience that can be entirely distinctive from all other players and occupants of the role (Litvin, Goldsmith & Pam, 2008). It is believed that each tourist will have different sense of feelings in varying situations as each one of them has distinctive values, beliefs, preferences, attitudes and behaviours (Yang & Wall, 2009).

Most of the researchers have challenged the concept of stereotyping the tourist role on the basis of cultural differences or nationality because sometimes they often lead to misconceptions about tourist groups. For instance, it is believed that Japanese people cannot speak English and the tourist guide has to provide them assistance when communicating among the local residents; it is untrue in many situations as there are many Japanese people who can easily communicate in English.

Likewise, there is a belief that Asian people like to eat their food items and don’t prefer to try out the local food items of the destination place; it is a myth as well because there are many people who are looking forward to try out the new food items of the destination place (Selstad, 2012). Hence, the tourist roles should not be confined to the limited set of observations as every tourist has distinctive features and prefers to be treated in accordance to the individual personality possessed by the person.

Rethinking the tourist role

With the robust growth and development in the field of Internet, the tourist roles have changed to a great extent as the tourists have become information seekers and proficient in developing their own travelling packages. As they have easy access to the extensive range of details about various destination places, they ensure that they select the places in accordance to their own choices so that they have a marvellous time during their complete tourism (Selstad, 2012).

The concerned authorities have to ensure that they even make proper use of the advertising mediums so that right message is communicated to the tourists. One key point that has to be given adequate attention is that the tourists should be treated as individual beings and they should be presented many alternatives so that they can have a sensational travelling experience.

Conclusion

From the studies of a wide array of theorists and researchers, it is evident that the tourist roles cannot be stereotyped as the tourists prefer to be treated as distinguished individuals and they avoid being viewed as aliens or strangers in the destination places. The tourism industries have to ensure that they offer the most astonishing experience to the visitors and offer them unlimited opportunities for carrying out their activities within the ethical boundaries of the country in accordance to the Law.

Hence, the stereotypes have immense impact on the tourist role and it should be changed so that the tourists are willing to visit the place on repetitive basis and any conflicts in their views about tourism in the respective place are tackled properly.

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5 Star boutiques hotel London for tourists brings the best comfort and luxuries for tourists, business travellers, couples, friends or anyone who wants to enjoy London. Those who want to stay in intimate and luxurious hotel properties that differentiate themselves from hotel chains or larger groups of hotels can opt to stay in boutique hotels.

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Best 5 Star hotels Knightsbridge is located in the street and district in the City of Westminster. It is a high profile location in London as it has some of the highest property prices in London. Some of the best hotels in London are to be found in the Knightsbridge area. The luxury hotel is the 22 Jermyn Street that is a boutique style hotel in London.

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The 5 star hotels Mayfair are very classy. The hotels in this area compete for high end clients and so the amenities and facilities are of very high standard. The area of Mayfair is a combination of expensive residential properties, offices and shopping areas like Bond Street, Oxford Street, Regent Street. Hotels in Mayfair are almost entirely of the four and five star standard and it has the highest densities of 5 star hotels anywhere in the world.

Ascott Mayfair hotel is located in the middle of Mayfair and is housed in an art deco building that provides comforts and amenities of home and services of a luxury hotel. Athenaeum hotel is located in Piccadilly on the edge of Mayfair opposite Green Park. The rooms are comfortable and have CD player and many more such amenities.

Claridge’s Hotel is one of the most famous hotels in London. It has a combination of Victorian architecture, art deco design and contemporary styling. Connaught hotel is located within walking distance of Hyde Park, Marble Arch and Piccadilly. It has the qualities of geniality, poise that welcomes the guest warmly. Mayfair hotels have chic, style and welcome you warmly.

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5 Star Concierge in London take care of your every need throughout your stay with a service that is unmistakably the best. The concierge in five star hotels in London is remarkably knowledgeable and up-to-date about what’s happening in and around London. They will give you ideas for days out and restaurant and theatre bookings, arrange a drive in a limousine, they will look after you from the moment you arrive.

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It always cross mind of stakeholders in the tourism industry of why people buy package trips to be on holiday or business trip they take, why visitors choose one particular destination instead of another. For the stakeholders, it is a challenge to learn and understand pre-requisite factors visitors take into consideration in choosing a destination. Holloway (1998) said that relatively little is known about tourist motivation and although numerous statistics are gathered which reveal a great deal about who goes where, the reasons for these choices are little understood.

These literature reviews highlights the different theories of stakeholders and the use of Network Analysis (NA) to study the link between different destination stakeholders. Stakeholder theory is a management theory which argues that the interests of all stakeholders are of intrinsic value (Donaldson and Preston, 1995).Literatures also enlightens the different theories of motivation combine with the different author’s motivational factors to explain why people travel. The “pull” and “push” motivation factors are the theories that are the most acceptable (Yoon & Uysal 2005; you et al., 2000). The concept behind this theory is that people travel because they are pushed and pulled to travel by certain forces (Uysal & Jurowski,1994). Uysal & Jurowski, 1994 stated the push factor are socio-psychological needs related to intrinsic motivators while pull factors relates to the attractiveness and specific features of the destinations. ).

LINK BETWEEN STAKEHOLDERS AND NETWORK

A tourism destination may be considered as a cluster of interrelated stakeholders embedded in a social network (Scott at al., 2008a).Such a network of stakeholders interacts, jointly meeting visitor needs and producing the experience that the travellers consume. A stakeholder is “any group or individual who can affect or is affected by the achievement of the organization’s objectives” according to Freeman, (1984, p.46). Palmer, 1996; Tyler and Dinan 2001; Pforr, 2002; developed networks as an important conduit for managing public-private relationships and understanding structures of tourism governance.

Interaction of stakeholders is multifaceted. Governance is a concept used to direct the stakeholders. It refers to relationships between multiple stakeholders and how they interact with one another. It involves how stakeholders determine implement and evaluate the rules for their interaction (Beritelli et al., 2007).

The Network Analysis is an applicable method used to study the link between tourism destination stakeholders while differentiating between the public and private sector.

An individual firm’s performance depends on the behavior of others that it is directly and indirectly connected to according to Freeman (1984). The NA studies the links between tourism destination stakeholders, while distinguishing between private and public sectors.NA show in preferential order with which stakeholder they want to be in touch first.

TOURISM MOTIVATION

The question that is still asks by many authors and stakeholders are the factors that encourage tourism to travel, that is, motivation. Motivation refers to hat directs the behavior of the individual towards goals. It is defined as the psychological process that gives behavior purpose and direction( Kreithner,1995). According to S.P.Robbins (1997), motivation is the process by which activities are started directed and sustained to fulfill both physical and psychological needs. Whenever an individual try to satisfy a need it is classified as motivation, need is an objective interest. Robbins (1997) explained the motivation process as follows.

C:UsersNathaliePictures3-8cb9d53c1c.jpg

(Source: S.P. Robbins (1997), Organization Behavior: Concepts, Controversies, Applications, 7th Ed.

The diagram demonstrates the willingness for individual to employ high levels of effort to reach organizational goals in order to satisfy some individual needs or self- individual needs.

As shown above, unsatisfied need always lead an individual to be anxious. This state of mind is converted into tension making an individual to wish something. These wishes or drives provoke a search behavior. As from the search behavior, individual discover wants that if satisfied will lead to a reduction in tension.

So, when an individual is on pressure, they alleviate this stress by making effort. The greater the stress the higher will be the effort made. This effort leads towards achieving goals set, leading to satisfaction of needs. According to the understanding of Luthan (1995), this process lies in the meaning of and relationship between needs, drives and incentives.

The following section deal with the different factors stating why visitors want to visit a destination and why they choose one particular destination instead of another. To better understand the, the concepts of “push” and “pull” factors are developed.

THE PUSH FACTOR A TRAVEL MOTIVATOR

“Travel motivations” is one of the useful approaches in understanding travel needs and tourists’ behaviours (Crompton, 1979; Yoon & Uysal, 2005).After the study done by Jang and Wu(2006), they stated that there are significant differences among travellers from different countries in terms of the level of importance attached to the “push” and “pull” factors. Starting with the push factor,it described how people are pushed to make a travel decision by internal forces (example,to have holiday, to rest or relaxaˆ¦) according to Uysal & Hagan. Push factors are socio-psychological needs, which are related to intrinsic motivators. The Maslow’s (1943) hierarchy of needs is the most influential model used and its application to tourism research. All human needs can be arranged in a hierarchy of five categories according to Maslow (1970) as shown in the figure below.

C:UsersNathaliePictures450px-Maslow’s_Hierarchy_of_Needs_svg.png

According to Maslow, the human need follow these steps in an ascending manner. The most basic need is the physiological one which satisfied the basic needs of individual. Once the basic need is fulfilled, human upgrade their needs and look forward for the next level to be satisfied. However, there are cases where individuals want to satisfy a higher level though the lower level is not accomplished.

Pearce (1982) suggests that travel motivation has the properties of an approach-avoidance paradigm. He developed the ‘Travel Career Ladder (TCL) in accordance with the Maslow’s hierarchy of needs as a conceptual framework. The aim of the TCL is to show how people’s needs change as experience increase. Pearce classified the TCL into five steps starting with the lowest;

Relaxation

Stimulation

Relationship

Self-esteem and development

Fulfillment

TLC proposes that people progress upwards through motivational levels with accumulated travel experiences (Lee and Pearce, 2002). The TLC demonstrates how individual start their travel career at a low level, that is, Relaxation. As individuals become more experienced travelers, they advance for higher goals until they reach high level of fulfillment.

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It is recognized that the push factors contribute in the study of tourism behavior and understand a wide variety of needs that can be influential motivator to tourist behavior. Cohen (1972, 1979a, 1979b) contended that what tourists want is not merely to satisfy their psychological needs but authenticity of the destination. So, the other factor which could motivate people to travel must be taken into consideration. The following section will focus on the external motivator.

THE PULL FACTOR

The pull factor focus on another aspect of tourism behavior. Pull factors are external and related to the attractiveness and specific features of the destination (Uysal & Jurowski, 1994). They are the general features of tourism regions that people recognize as touristically agreeable and attractive, such as culture, traditions and heritage, nature, amusement among others (Peters, 1969).After the study on travel motivators of Yuan & Mc Donald, Jang &Wu (2006), Mohammad & Mat Som (2010), Jang & Wu (2006) asserted that common pull factors found in most studies were natural and historical environments, safety, cost, ease of access, and facilities.

A destinations attractiveness pulled individuals in their travel decision. Dann (1981) asserted that it is comprehensible that researchers focus attention on the pull factors of tourist behavior, since they symbolize the specific attractions of the destination, which tempt once the decision has been made. Dann(1981) also claimed that the pull factors of the resort such as sunshine, relaxed tempo and friendly natives , both respond to and strengthen push factor motivation.

DIRECT RELATIONSHIP BETWEEN TH E PUSH AND PULL FACTOR

People’s motivation to travel has been discussed on a multidisciplinary basis since the

aftermath of the Second WorldWar, when mass tourism began to thrive. It is not only a

matter of explaining, from a psychological perspective, why some people travel and others do not (Crompton, 1979; Dann, 1977; Plog, 1974).

Plog’s (1974) With “travel personality,” P. L. Pearce’s With (1988) “travel career ladder” (TCL),and Cohen’s With (1972) concept of “strangeness-familiarity,” try to show the possible factors that drives people to travel. Plog use the travel personality to model to study why do some people do no travel. He based himself on psychological impetus.

Push-Pull framework a motivational paradigm

Moreover, Plog (2001) use the Travel Personality model to study why some people do not travel. Plog (1974) concluded that nontravelers are indeed nonadventuresome and proposed the notion of travel personality in this sense; dependable, near dependable, mid-centric, near venturer, and venturer types. In his model, emphasis is laid on psychological impetus.

Cohen (1972, 1979a, 1979b, 1984), from a sociological perspective, set his model in a broader social context, arguing that tourism is essentially a social phenomenon. Tourists therefore should be analyzed by underscoring their relationships with both business establishments such as tour operators and the destination (Cohen, 1972). Highlighting social relationships in the tourism system remains the most remarkable distinction of Cohen’s (1972) model, which is represented by the concept of strangeness-familiarity. This concept is constructed by breaking down Boorstin’s (1964) holistic image of “the tourist” into more specific and empirically identifiable types,namely, the “organized mass tourist,” “individual mass tourist,” “explorer,” and

122 Yong Chen, Barry Mak, and Bob McKercher “drifter” (Cohen, 1972).

As Plog, Pearce and Cohen focus in the same field of study, they all use their model to represents an integrated motivation framework. The aim behind is to show the possible linkages among the three models.

Diagrams + Explanations

(It is

taken for granted in this framework that the destination represents the pull factors of

tourist motivation, whereas characteristics of individual tourists represent the push

factors (Crompton, 1979). However, at a destination such as in a city with a complex

of economic, cultural, and historical attractions and heritages, tourist behavior may

demonstrate a pattern other than those indicated by, for example, the distance decaying

effect from the origin to the destination.)